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Banks Advised to Fix Debt and Legal Issues

By on October 4, 2012

Banking Sector Participants

A University Lecturer, Taiwo Odumosu said has said banks must make sure they get legal and debt recovery matters right, before permitting their customers to take loans from them. 

Taiwo spoke at a workshop organised by Monsad Ventures Limited, on the theme-, “Credit management, and Debt recovery,” he stated that, in the world of business, lenders ought to be careful and diligent in analysing credit requests, legal issues, and debt recovery issues.
 
He stressed the need for an upbeat legal system and control that comprehends the applicable laws, know how, as well as summoning legal procedures; shun legal pitfalls in debt collection dialogues.
 
He reiterated the need for credit analysts and lawyers to carefully study and understand what a credit report holds, particularly information about customer’s borrowing record. He added that they should work hand in hand with credit bureau service providers.
 
The Lecturer advised banks to consider the credit bureau as an information warehouse, adding that, the credit bureau is the guide and credit could suffer and if it goes wrong.
 
Furthermore, he said that bank should stick to the Nigeria Deposit Insurance (NDIC) Act, Section 22 which states that, it is unlawful for an insured bank-not to make sufficient provisions for bad and uncertain debts up to the amount suggested by the company or pays dividends against this provision.
 
According to him, when an insured bank closes down for whatever reasons, it should be able to recover monies or properties owned to it by businesses or individuals to resume, and that the credit industry must never let her guard down to stay in business.

In his conclusion, he regretted that, there are no sufficient laws to protect and cover financial lending institutions when they encounter bad loans or when there is an issue of non-payment.