EFCC Warns Banks Against Unsecured Lending, Cites Rising Insider Abuse and Loan Defaults

The Executive Chairman of the Economic and Financial Crimes Commission (EFCC), Ola Olukoyede, has issued a strong warning to Nigerian banks against granting loans without credible collateral, stressing that such practices expose financial institutions to insider abuse and a surge in non-performing loans.

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

Represented by the Acting Zonal Director, Lagos Zonal Directorate 2, Assistant Commander of the EFCC, Bawa Usman Kaltungo, the EFCC boss expressed concern over the prevailing loan approval processes in the banking sector. He noted that loans backed solely by personal guarantees, including those of top executives, are insufficient and pose serious risks to depositors’ funds.

According to him, the trend of “top-down” lending—where loans are approved based on influence rather than proper risk assessment—encourages insider abuse and weakens financial discipline. He emphasized that banks must insist on verifiable and tangible collateral before approving credit facilities.

Olukoyede further stressed that banks act as custodians of public funds and must exercise utmost caution in their lending practices. Granting unsecured loans, he warned, is tantamount to mismanaging depositors’ money and could undermine confidence in the financial system.

He also urged financial institutions to strengthen their internal controls by conducting thorough due diligence on customers. Where due diligence processes are outsourced, he advised that clear liability clauses must be established to ensure accountability.

Reaffirming the EFCC’s commitment to combating financial crimes, Olukoyede called for stronger collaboration between the Commission and banks. He specifically urged prompt release of bank staff when requested for investigations, particularly in cases involving suspected insider involvement.

In his remarks, Abiola appreciated the EFCC for its continued engagement and partnership. He noted that the visit aimed to deepen cooperation in tackling financial crimes and disclosed that the bank has a dedicated team responsible for handling EFCC-related requests.