Dr Titus Okunrounmu, a former Central Bank of Nigeria (CBN) director, has advised commercial banks to adhere to CBN guidelines in granting loans to investors to reduce bad loans in the financial sector.
Okunrounmu gave the advice on Wednesday in an interview with the News Agency of Nigeria (NAN) in Ota,Ogun.
He spoke while reacting to banks recovery of N50.32 million bad loans from debtors within 90 days of the commencement of Global Standing Instructions (GSI).
The former CBN director noted that the level of bad loans in the banking sector increased because most banks do not follow CBN guidelines in granting loans.
“If Nigerian Banks are serious, they know how to recover their bad loans because there are procedures in granting loans.
“If banks followed the CBN guidelines, the level of bad loans which have been in existence for over 20 years will reduce.”he said.
He stressed the need for banks to ask if necessary collateral in granting loans to people to prevent financial sector from collapsing.
Okunrounmu said that banks recovering N50.32 million from defaulters within 90 days of implementing GSI was a good development.
He called on banks to take repayment of loans seriously because the guidelines of granting loans had been abused by the financial sector.
Okunrounmu alleged that some of the bad loans were borrowed by insiders in the banks which made recovering of the loans difficult.
“The issue of repayment of loans should be taken seriously by banks to avoid another crisis in the financial sector,”he said.
He said that if banks were doing their real businesses without abusing guidelines of granting loans, there would not be crises of bad loans in the country.
Okunrounmu urged the apex bank to ensure that banks obeyed guidelines in granting loans to the people.(NAN)