THE Asset Management Corporation of Nigeria (AMCON) has just read the riot act to bank debtors who are working to subvert its intentions over banks toxic assets. All stakeholders should therefore support the AMCON and the Central Bank of Nigeria (CBN) in the timely intervention to call to order stubborn debtors who are avoiding negotiations with their creditors, employing unconventional means to avoid debt repayment obligations. At a time like this, the banks should be shielded from further damaging experiences or the menace of harrowing borrowers. Certainly, the financial services industry can do without such distractions by the legion of intransigent bank debtors. AMCONs warning that the debtors wont get better terms when it restructures their loans is reassuring, as it is bound to send a strong message to the defaulters that the banks are not charity institutions. The AMCON move is coming also against the background of its seeking the apex banks approval to start the second phase of its programmes to buy bad debts from the deposit money banks. We support every move to sanitize the industry in the interest of the economy, just as chief executive Mustafa Chike-Obi indicated that non-performing loans to be purchased under the second phase will be from healthy banks and others missed in the first phase. For a while, it has become more fashionable to shun or default in loan repayments. But this is a disturbing signal from the key sector of the economy. It is a fact that when debtors shun contractual obligations with the banks, they distort institutional plans as well as place the banks at risk of new investments. A serious threat is therefore constituted to the nations economic growth and development. Essentially, a deliberate refusal to honour loan agreements should be classified economic sabotage on the part of the intransigent borrowers, their actions bordering on delinquency. It is an abuse of privilege, besides the fact that banks would naturally restrict flow of similar facilities to intending borrowers, in an attempt to cut risks of exposure to non-performing loans. As the banks amassed huge non-performing loans that in some cases were carelessly secured, the trend left many financial services providers chasing shadows on overdue facilities now computed in the region of about three trillion naira. We urge the regulatory authorities to remain steadfast in their convictions to return the economy to the path of sanity, before further havoc is wreaked. The scenario recognizes two groups of borrowers: the genuine borrowers who wish to service the debts but have been hampered by the recent global downturn in the economy. For this group, we cannot discountenance re-negotiations; they deserve assistance in their quest to weather the storm. However, the second category of unwilling debtors should not be spared; what they are promoting is breach of trust. We urge the authorities to insist on saying no to a culture of impunity. There must be a way to stop the antics of delinquent borrowers who have found a way round acceptable standards, mostly by colluding with unscrupulous loan officers or the approving authorities. It could only send negative signals to foreign investors the country has been trying to woo back to the economy. Bankers too have to pay better attention to the ethics of their profession. Every industry has its own challenges, but it wont remove anything from its image if the industry jointly confronts a common enemy that seeks to place moral questions on collective interests. The issue of inadequate security must be addressed, to check abuses by managers who collude with serial loan defaulters. Abuse of legal processes is another means of frustrating the system, as the borrowers buy time by resorting to the courts to obtain orders or injunctions inimical to lenders interests. We urge the judiciary to always dispassionately look at issues to avoid the collateral damage to banks and the economy. The fundamental rights of borrowers must also be respected. There have been justified complaints too of debtors going beyond the cases in dispute to impugn on the integrity of banks and their directors to distract from the demands being made on them. This is unhelpful to banks that are willing to extend credit to credible customers. Customer defaults would only always complicate a revolving loan system. This makes it imperative on the banks to apply caution in granting unsecured facilities while not shutting the door against genuine applicants. AMCON definitely has a mandate to reform the process, and it must work assiduously to achieve that goal. But in doing so, there is the tendency that banks can misunderstand the corporations role. That would make it more difficult for them to perform their core primary duties. We urge a more interactive and coordinated approach to economic issues to achieve the overall objective of solidifying the economy. The notion that debtors would wait until their loans become non-performing should be deplored by all. A number of operators in the system have suggested a functional bureau to oversee bank credits, and in particular to provide vital information about loan applicants and their credit history for informed judgment in granting facilities. That would be an idea worth implementing to curb abuse by both borrowers and officers of the lending banks. Loan exposure is a risk in itself, so the borrowers ought to be prepared for eventualities, harsh economic climates or not. The runaway debtors must be identified and forced to repay or make legal commitments. Conscious efforts must be made to recover the bad loans. Where necessary, sanctions should be applied, otherwise other applicants would make worse attempts to further sabotage the system. We also support suggestions by stakeholders to raise a commercial court to try infractions in the industry by the operators. Restoring the banks to full health is not negotiable. It demands a holistic approach by the relevant government agencies and regulatory bodies. Underhand deals in the banking system have to stop, but then the outstanding debts must first be recovered from the delinquent borrowers.
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