EFCC Warns Banks Against Risky Lending Practices, Urges Stronger Collateral Checks

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The Chairman of the Economic and Financial Crimes Commission, Ola Olukoyede, has cautioned Nigerian banks against issuing loans without verifiable collateral, warning that such practices expose depositors’ funds to risk and encourage insider abuse.

Olukoyede gave the warning during a courtesy visit by the Chief Audit Executive of First Bank of Nigeria Plc, Mufutau Abiola, and his delegation to the EFCC Lagos Zonal Directorate 2 in Ikoyi.

In a statement released on the Commission’s official X handle on Monday, the EFCC boss, who was represented by the Acting Zonal Director, Bawa Kaltungo, expressed concern over lending practices that rely solely on personal guarantees, including those of top executives.

He stressed that banks are custodians of depositors’ funds and warned that granting loans without adequate collateral amounts to mismanagement of such funds.

“Loans backed only by personal guarantees are insufficient and can lead to non-performing loans. Financial institutions must strengthen their due diligence processes to safeguard depositors’ money,” he said.

Olukoyede also advised banks to ensure accountability when outsourcing due diligence, insisting that such arrangements must include clear liability clauses.

Reaffirming the EFCC’s commitment to collaboration with financial institutions, he urged banks to promptly release staff members when requested for investigations, especially in cases involving suspected insider misconduct.

“We must work together to stay ahead of financial criminals. Where necessary, we escalate cases to foreign security agencies,” he added.

Earlier, Abiola commended the EFCC for its continued engagement with the banking sector, noting that the visit was aimed at strengthening cooperation. He also called on the Commission to expedite investigations involving bank staff, adding that a dedicated team within the bank handles EFCC-related matters.