Director of Bank Examination Department, Adedayo Adeleke, said the Nigerian Deposit Insurance Corporation (NDIC) has closed down 50 banks between 1994 and 2011 because of loans taken by their directors.
He made this known at a workshop for business editors and financial correspondents in Kano.
Adeleke, who spoke on the topic: ‘Curtailing the Growth of Non-performing Loans in Banks’, said regulators are worried about the increasing rate of non-performing loans in the banking sector.
“Regrettably, between 1994 and 2011, we closed down over 50 banks, and what we discovered over time is that most of the loans that dragged these banks down where insider loans given to their directors,” he said.
As of December 2016, 25 deposit money banks had a total loan portfolio of N18.53 trillion and N1. 85 trillion were non-performing loans.
This represents 10 percent of the total sum and is higher than the regulatory five percent threshold for deposit money banks.
Adeleke said the NDIC would introduce expected loss rules to compel banks to make provision for loans that are expected to go bad because of the economic situation.