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CBN learns nothing

IF the Central Bank of Nigeria thinks  publishing the list of top bank debtors indicates it is doing its work, it has failed to understand the huge debts owed banks is a mark of failure of the regulator. Where else does the Central Bank wait for banks to accumulate bad debts?

Publication of the list does nothing to absolve the CBN of liability for poor supervision of banks which are going through a tougher time, especially the ones that are under direct daily supervision of the CBN. It does not take courage to publish a debtors’ list.

Was it a ploy to ensure the debts are not paid, since the affected organisations and powerful individuals can sue or use their connections in governments to stop quicker recovery of the debts?

It is important debtors honour their obligations to banks. It is also good the CBN implements policies that make it difficult for banks to skip the rules and grant loans as favours rather than business transactions.

The published list is a catalogue of businesses and their interests that have used banks to deplete resources that could strengthen the economy, yet the CBN must admit that businesses cannot thrive without loans.

The move to circulate the list to the banks, to forestall other banks from exposure to heavy bank debtors, is one of the CBN’s duties. There is no point praising it for doing its work. What remains to be seen is how it would recover the debts.

CBN wasted trillions of Naira in public funds in covering its deficient regulation of banks. The banks it took over were further ruined and its refusal to discuss participation of bank shareholders in the resuscitation of distressed banks remains a major obstacle to the fate of the banks.

Loans are procured as contracts, clearly stating out obligations of the contracting parties. Organisations and individuals that borrow are meant to have collaterals to back up their loans. What happened to the collaterals?

Have the banks taken over the collaterals? How did the loans become these mountainous piles? Who did not do his job?

How is it possible the same punishment would apply to debtors for loans obtained under different terms?

Neither the CBN nor the Assets Management Company of Nigeria, AMCON, would make the expected changes to improve banks if it adopts measures that failed woefully in the past.

How many times have banks’ debtors list been published? Did the publications recover the loans? Banks officials — plus supervisors at CBN— deserve punishment for issuing unsecured loans.

The CBN cannot blame others for these bad debts when its slack supervision is central to them and guarantees future bad loans.


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Comments expressed here do not reflect the opinions of vanguard newspapers or any employee thereof.