A banking expert, Dr Uju Ogubunka, has urged the Central Bank of Nigeria to prosecute bank directors with non-performing loans, saying the move will serve as a deterrent measure.

Mr Ogubunka, a former executive secretary, Chartered Institute of Bankers of Nigeria, said this during an interview in Lagos, on Tuesday.

He stressed that prosecuting directors associated with non-performing loans was one of the best ways of addressing the challenge.

Mr Ogubunka stated, “We expect the regulators to prosecute them in court and hope for justice, as a deterrent measure to other erring bank staff. This is a more innovative approach in tackling bad loans than just only asking the directors to resign without facing the consequences of their actions.’’

He emphasised that prosecuting bank directors associated with bad loans would enforce corporate governance and engender investors’ confidence.

Mr Ogubunka said, “This is imperative to ensure credibility in the system and foster economic growth.’

Also, President, Progressive Shareholders Association of Nigeria, Boniface Okezie, said that the CBN’s decision to check bad loans was timely.

Mr Okezie said, “Bank directors are not restrained from securing loans to advance their business interests. However, they should ensure such facilities do not end up becoming non-performing loans. Which is not right and does not befit the status of a bank director who ought to be exemplary in his actions.’’

He stressed that the CBN’s directive would lead to sanity in the banking sector.

“This punitive measure from the regulator will ameliorate the insider abuse in the banking sector and restore trust in the system. This has been the hallmark of banking practice over the decades,” Mr Okezie said.

The CBN ordered bank directors with non-performing insider-related loans to immediately resign from their positions as part of efforts to strengthen corporate governance and reduce credit risk exposure in the banking sector.

The directive was issued in a circular signed by the acting Director of Banking Supervision, Dr Adetona Adedeji.

In the circular addressed to all banks, the apex bank mandated compliance with insider-related credit limits as stipulated in Section 19 of the Banking and Other Financial Institutions Act, 2020.

(NAN)