The Nigeria Deposit Insurance Corporation has raised concerns over the failure of some debtors of defunct banks to repay outstanding loans, accusing them of frustrating recovery efforts through asset concealment, prolonged legal proceedings and intimidation.
The corporation warned that these tactics were hindering the recovery of funds owed to depositors and delaying the settlement of outstanding claims by customers of liquidated financial institutions.
The Director of the Asset Management Department of the NDIC, Ogungbemi Theophilus, disclosed this on Monday at the Stakeholders’ Seminar and Public Relations Workshop held at Exclusive Serene Hotels and Suites in Wuye, Abuja.
Speaking on the challenges facing the corporation in recovering assets of failed banks, Theophilus said some debtors wrongly assume that the revocation of a bank’s operating licence absolves them of their repayment obligations.
He accused the debtors of concealing assets, frustrating the service of court processes, employing delaying tactics in legal proceedings and sometimes resorting to intimidation.
However, he said the corporation remained committed to carrying out its recovery responsibilities professionally despite the challenges.
He described loan recovery as one of the most challenging aspects of bank liquidation, particularly when borrowers default on their obligations before the affected financial institutions have their operating licences revoked.
“A loan that was not repaid when the bank was alive does not become easier to recover when the bank is dead,” he noted.
Theophilus warned that prolonged delays in recovering loans and disposing of physical assets could erode their value, reducing the funds available for distribution to depositors.
He explained that prolonged periods of neglect could lead to the depreciation of unoccupied buildings, deterioration of equipment and increased difficulty in recovering outstanding loans.
“Every delay slows payment to depositors,” he warned.
Theophilus said the Asset Management Department was responsible for managing the loans, physical assets and investments of failed deposit money banks, primary mortgage banks and microfinance banks.
He explained that its responsibilities included recovering outstanding loans, disposing of properties and investments, and converting recovered assets into cash for the settlement of uninsured depositors.
He added that the corporation’s ability to compensate depositors with balances above the insured limits depended largely on the successful recovery and liquidation of these assets.
