Eradicate loan sharks to entrust microfinance banks- CIBN ex-President

A former president of the Chattered Institute of Bankers of Nigeria (CIBN), Mr. Okechukwu Unegbu, has said that the Central Bank of Nigeria (CBN) will need to do everything within its power to get rid of indecent digital lenders, otherwise known as loan sharks, because they are dangerous to the economy.

Unegbu, who stated this in a conference with the News Agency of Nigeria (NAN) on Sunday decried the expansion of digital lenders in the Nigerian financial system.

He urged the CBN to empower Microfinance Banks (MfBs) to be more functional in their lending role to small businesses to eliminate the menace of loan sharks.

Unethical practices
Highlighting some of the unethical practices of digital lenders, Unegbu said:
“These loan sharks are dangerous to the economy, and the CBN should do everything to eliminate them. They give loans to people and when there is a default they call all contacts on their phone to embarrass them; it’s unethical.

“The MfBs are better positioned to offer such service, and I’ll urge the CBN to empower the MfBs to be able to carry out their mandate more effectively.”

The activities of the digital lending platforms were often not in conformity with the CBN consumer protection regulation which mandates financial institutions to ensure that debt recovery processes are transparent, courteous, and fair.

The apex bank said that the process must be devoid of undue anxiety, intimidation, harassment, humiliation, or threat.

During a recent Monetary Policy Committee meeting, the suspended CBN governor, Godwin Emefiele, had expressed displeasure in the way loan sharks handle customers who defaulted.

“If you go to a loan shark to borrow, you will pay two or three times the amount in 90 days. When you refuse to pay, they will seize your property; bicycle, or television just to collect N200,000,” he said.

He however said regulating the loan sharks was a challenge since they were mostly in rural areas and unregistered. “Moreover, the CBN is not a law enforcement agency like the police,” he had said.

Loan apps defy FCCPC.

Nairametrics recently reported that despite the efforts of the Federal Competition and Consumer Protection Commission (FCCPC) to sanitize digital lending space through registration, harassment, and defamation of borrowers have continued.

Some of the loan apps registered by the FCCPC continue to defame their customers through the usual practice of sending messages to contacts of their debtors. This also contradicts a recent Google policy forbidding loan apps from accessing their customers’ photos and contacts.