By Michael Eboh
An expert in the Nigerian financial market, Mr. Akin Oladeji, has tasked banks in the country on the need to cooperate with the newly introduced credit bureaus, in order to address the issue of bad loans in the nationâ€™s financial system.
Speaking at a forum in Lagos, weekend, Oladeji, who is the Managing Director, Futures and Bonds Limited, disclosed that the ability of banks in the country to grant loans has been eroded by individuals who borrowed money from these banks and have reneged on their promises to repay the loans they took.
He noted that debts owed banks are in the region of several billions of naira, noting that majority of these debts have been classified as bad debts, making the banks to resort to belt-tightening measures with regards to loans and credits.
He commended the Central Bank of Nigeria (CBN) for its ingenuity and for licensing three credit bureau operators in the country, advising banks, however, not to expect too much from these credit bureaus, as the bureaus would have to contend with the daunting task of data collection.
He said, â€œThe capacity of banks to grant loans has been seriously eroded by unscrupulous Nigerians who owe banksÂ and are either not willing to pay or have lost their capacity to repay their loans. These bad debts run into several billions of naira, the banks are therefore justified to tighten their credit belts.
The CBNâ€™s licensing of three credit bureau operator is a step in the right direction. The absence of credit data has made many banks to grant loan to unworthy persons. What we have now is that someone will go to bank A to get loan. He will move to bank B to get another loan. Bank B has no way of knowing that he owes bank A.
With the existence of credit bureau, it would be easy to detect. However, banks should not expect immediate miracles from the bureau operators, because they have to contend with the problem of poor data collection. It may take a long time, but we shall get there.â€
He identified lack of technical competence as a major challenge facing the banking industry, calling on banks to pay serious attention to capacity building. He blamed the shortage of competent staff for dangerous exposure of the banks to the capital market through margin trading.
â€œIt is not enough to drive staff to the streets to look for deposits, banks management must train and re-train their staff to be able to manage the resources profitably. This kind of training is not obtainable in the universities or Institute of Bankers, it is a kind of career development programme. Competent and experienced bankers would study the trend in the market and sell the securities at the right time. But they waited until the loss reached between 50 per cent to 90 per cent. How will the clients pay back?â€ he noted.
Oladeji advised the new Governor of the CBN, Mr. Sanusi Lamido to take issue of regulatory supervision and compliance of banks with international standard paramount. â€œThe industry must be allowed to operate on free entry and exit principle without any shareholding bench marking. If there is no bench marking in other sectors why banks,â€ he noted.