Industry Record N5.18bn Frauds, Forgeries In Six Months
Worried by the rising incidences of non-performing loans linked to bank directors, otherwise known as insider related credits, the Nigeria Deposit Insurance Corporation (NDIC), on Thursday said it has recommended the return of a rule prohibiting directors of deposit money, microfinance banks and Primary Mortgage Institutions (PMIs) from obtaining credits from their respective banks.
The Central Bank of Nigeria (CBN) is the primary regulators of the nation’s banking industry, while the NDIC is a deposit insurer as its name suggested and therefore a primary regulator.
Alhaji Umaru Ibrahim, managing director/chief executive of the corporation said already it is collaborating with other stakeholders such as the Economic and Financial Crimes Commission (EFCC), Police Special Fraud Unit (PSFU) and the Financial Malpractices Investigation Unit (FMIU) to conduct investigations into banking malpractices, with the NDIC providing capacity building programmes for the agencies in addition to seconding some of its staff to the institutions to assist them in investigating financial crimes.
He called for continued cooperation and collaboration between regulatory/supervisory authorities, the banks, the general public and the government in the fight against corruption in the banking industry.
It would be recalled that in the wake of the banking crisis, leading to the removal of eight bank MDs by Lamido Sanusi, then CBN Governor in 2009 (now Emir Muhammadu Sanusi II), banks in the country were directed to publish their insider related credit and status of such loans (whether such loans are performing or not).
The latest move by the NDIC is coming one year after the CBN intervened in Skye Bank, replacing the board and executive management over corporate governance infractions and a toxic loan book valued at N700bn. The bank was reportedly exposed to its former chairman, Tunde Ayeni to the tune of N103bn, among others.
Also, Ahmed Zakari & Co, external auditors of Unity Bank Plc had in the 2016 financial report noted the increase in its Non-Performing Loans (NPL) ratio to 48%.
According to INVESTDATA Research, 14 Nigerians listed on the Nigerian Stock Exchange (NSE), in 2016 reported total non-performing loans of N782.632bn, almost double the total N451.5bn net profit, which left industry average NPL ratio at 14%, almost triple the regulatory threshold of 5%.
Meanwhile, Umaru who was speaking on: “The Role of NDIC in Mitigating Corruption in the Nigerian Banks” at the general meeting of the Abuja Chapter of the Alumni Association of the National Institute (AANI), according to a statement by Hadi Birchi, Head of NDIC’s Communication & Public Affairs Department, put the amount involved in attempted frauds and forgeries in the nation’s banking industry between January and June 2017 at N5.183bn.
He noted that while the level of attempted frauds and forgeries stood at N2.756bn in the first quarter ended March 30, it dropped by N0.329bn or 11.94% to N2.427bn from April to June, 30, 2017.
Represented by the NDIC’s Deputy Director, Research, Policy and International Relations Department, Hashim I. Ahmad, Umaru said the reported cases of frauds, forgeries and outright theft involving bank staff recorded a huge 48.12% decline from N18.02bn in 2015 to N8.68bn in 2016.
The actual losses to the nation’s banking industry, he explained, dropped by 24.29% from N3.17bn in 2015 to N2.4bn last year, adding that reported cases of fraud and forgeries rose by 36.42% from 12,279 cases in 2015 to 16,751 cases in 2016.
The reduction in the rate of successful fraud incidences and actual losses, he noted, is an “indication of improved regulatory/supervisory oversight, increased vigilance by banks and the deployment of improved security architecture in the banking industry.”
The NDIC, in conjunction with the Central Bank of Nigeria (CBN), he said continuously supervise the banks to ensure their strict adherence to sound corporate governance practices.
Attributing factors breeding corruption in Nigerian banks to poor corporate governance, infractions in foreign exchange operations, cumbersome legal process and lack of effective sanctions of offenders, amongst others, the NDIC boss assured that issues relating to unethical financial practices and the resolution of conflicts between customers and their banks were being addressed by the Bankers Committee.
