Recalcitrance of borrowers is a major challenge for the Nigerian banking sector. Unpaid loans reduce the profitability of banks, and prevent them from lending more to businesses and consumers, which in turn slows down economic growth.
Some so-called rich people in Nigeria brazenly walk into banks to borrow depositors’ money with no intention to repay their loan obligation.
These daredevil loan defaulters are living large; some are flying private jets all over the place at the expense of the investors.
Today, some banks are battling to remain afloat while some had gone into extinction because of non performing loans/bad debts.
The huge challenge of debt recovery had prompted banks to resort to publishing the names and identities of directors of firms owing.
The aim was to shame the debtors by having their identities in the public domain and by so doing, make them pay up to avoid further embarrassment.
In fact, in 2015, commercial banks had adopted the approach of publishing the names of serial bad debtors and even recently too.
There was also a recent measure by the Central Bank of Nigeria, called Global Standing Instruction (GSI) programme, which gives banks the power to debit loans and accrued interests due from bank accounts of loan defaulters across the Nigerian banking system.
These strategies have not been seen to have yielded much positive results. Instead, these loan defaulters have become more daring and devise all manner of strategies to frustrate the banks from recovering their money.
Penultimate week, the media was awash with reports of the move by top lender, Access Bank Plc, to recover over N50billion judgement debt from the late Chief Sunny Odogwu and two of his enterprises – Robert Dyson & Diket Limited and SIO Property Limited.
Precisely, the judgment debt in favour of the defunct Diamond Bank Plc (now Access Bank) was against late Odogwu and two of his companies – Robert Dyson & Diket Limited and SIO Property Limited – in respect of a property situated on No. 31-35, Ikoyi Crescent, Ikoyi, Lagos State, known as Luxury Collection Hotels and Apartments (formerly Le Meridien Grand Towers).
The property owned by SIO Property Limited of which the late Odogwu was the majority shareholder, was financed with a loan abtained from the defunct Diamond Bank.
In April 2019, following regulatory approval, Access Bank had acquired all the assets and liabilities of Diamond Bank Plc. This authorised Access Bank to pursue recovery of all outstanding debts including the huge indebtedness by the late Sunny Odogwu and two of his companies.
Last year, a legal practitioner called for a national law that will assist lenders (banks and other financial institutions) to recover their money from serial bad debtors.