• Saturday, February 24, 2024
businessday logo


Learning a lesson from sanctioning directors of delinquent debtors


time will come when people will not be enthusiastic about becoming a director of a bank or company following various sanctions being meted on directors by the regulators over a breach of rule by their company.

The implication of imposing sanctions is to engender confidence in the appointment of directors and strengthening the institutions they represent.

One of the issues discussed at the 323rd Bankers Committee meeting held last week in Lagos was a follow up on the delinquent debtors of Deposit Money Banks (DMB) after the ‘name and shame exercise carried out by banks in line with the Central Bank of Nigeria (CBN) directives.

Consequently, the CBN and the bankers committed have agreed to sanction directors of those banks owing the debt. The essence of the new development is to ensure that these debts are completely paid or reduced to the level where it cannot be classified as chronic debt. 

Banks commenced the publication of delinquent debtors last week and would continue to do so weekly, monthly or quarterly as chosen by a particular bank,

The Bankers Committee did not give details of the sanction but Kolawole Balogun, Acting Director, Banking Supervision, CBN, who addressed the media after the meeting explained they are market sanctions that would to ensure that their outstanding obligations are reduced.

He said the publication is not at the instance of the Central bank but at the instance of the bankers committee. “Members agreed that one way of ensuring delinquent loans are reduced in the financial system is to embark on name and shame strategy. It does not end there; there are sanctions that we are going to follow up on the directors of the companies owing this debt”.

The CBN had directed all banks and discount houses to effective May give the delinquent debtors three months of grace to turn their accounts from non-performing to performing status and thereafter publish the list of delinquent debtors that remain non-performing in at least three national daily newspapers quarterly.

It categorized delinquent debtors are those whose accounts have been classified lost and include the persons, entities, directors, subsidiaries and other related parties. The list must be sent to the CBN as soon as the publication is made.

A circular signed by Tokunbo Martins, director banking supervision, CBN, reads: “Banks and Discount houses are also to note that delinquent debtors in the category described above will be blacklisted by the CBN and are therefore:banned from participating in the Nigerian foreign exchange market, and banned from participating in the Nigeria Government securities market. Please be guided accordingly”

Others who addressed the media after the meeting include Segun Agbaje, managing director/CEO Guarantee Trust Bank plc, Mary Akpobema, managing director, Enterprise Bank limited, and Ibrahim, Mu’azu, director, corporate communication, CBN.