AS controversy continues to trail the Central Bank of Nigeria (CBN) directives to banks to publish names of all debtors on or before August 1, 3015, members of Proactive Shareholders Association of Nigeria (PROSAN) have thrown their weight behind the initiatives.
LCCI had in a statement cautioned Deposit Money Banks (DMBs) in the country to reverse its decision to publish names of debtors, saying there is need to distinguish between two categories of loan defaulters.
But, the National Coordinator of PROSAN, Oderinde Taiwo, yesterday described the directive from the CBN as a welcome development.
He said: “It is a welcome development. As a student of history, when this type of exercise was carried out few years ago, many of the debtors quickly paid what they owed.
“Also, this practice will check the culture of recklessness, impunity and executive debtors masquerading as big boys all over the country.
“We discovered that most Banks need to shore up their 3rd tier capital adequacy, presently locked up under bad debt provisions”, said Oderinde.
Oderinde also used the opportunity to challenge quoted firms to emcourage minority shareholders to be part of their board.
Specifically, Oderinde said: “I would like to use this medium to express my view on Nigerian companies especially Banks not allowing minority shareholders representatives on their Board”. He added: “A ready example is our group challenging the Board of GTBank Plc to change their article 71 on their MEMAT. This singular act is another way to check this recklessness of borrowing by Directors and their families/friends and not want to pay back”.
In the last couple of weeks, DMBs served notices of their intention to publish names of ‘Delinquent Debtors’ in at least three national newspapers in compliance with the directive of the CBN.
The quarterly publications are expected to include the names of the directors, subsidiary companies and related parties. In addition, such companies and their subsidiaries will be barred from the foreign exchange market.
The Chamber, in a statement by its President, Alhaji Remi Bello, pointed out that it was important to avoid sweeping generalisations and examine the context of default on a case by case basis, adding that there are varying causal factors for loan default which has to be taken into account in matters of this nature.
According to the Chamber, there are defaults that have arisen as a result of genuine business failure (some of which are irreversible) which affected the capacity to repay; and there are defaults that have arisen as a consequence of deliberate intent not to repay.
It stated that the latter borders on character quality, which is what the Know Your Customer (KYC) concept is meant to address.
“Given the adverse consequences of nonperforming loans for the stability of the financial system, the risk to depositors’ funds and the sustainability of the banks, there is perhaps a compelling reason to take some drastic actions to avoid the grave consequences of mounting bad loans. Non-performing loans in the banking system is currently estimated at over N400billion”.
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