Can You Still Trust Your Banker?

Written by NaijaEcash

Topics: Entrepreneur, Nigerian

Can you still trust your banker? I know that sounds like a foolish question, but hear me out first. As an Entrepreneur, I agree w to the fact that my business success team will not be complete without a trustworthy banker. Unfortunately, entrepreneurs in Nigeria, are being made to doubt if really the bankers  actually deserve a place in the success team. The recent Home Grown Financial Crisis rocking the Nigerian Banks is a real concern to Nigerian Entrepreneurs especially the small scale businesses.

I was chatting with a friend some weeks back and she asked if a particular Nigerian Bank was financially healthy. To me the question was absurd and I told her so. I even boasted that the era of banks going distressed is gone forever. Oh, how wrong I was. I had believed the lies that were told by my bankers. I believed the false reports tendered by the bankers as proof of health to the general public. The particular bank my friend was making enquiry about was among the five banks recently placed under searchlight by the CBN.

The five Nigerian Banks, according to CBN concentrated too much effort in granting loans to businesses in the highly risky oil and gas sector. As if that wasn’t enough, they set aside the rules governing loan approval and were utterly reckless in granting personal loans to insiders. Much of the loans were not properly collateralize as required by law. Simply put, they were playing lottery with depositors funds and jeopardizing investors funds.

While some people praised the effort of the CBN, some criticize the crude method used by the CBN. Recent information has shown that the CBN didn’t fine tune her findings before rushing to the press. Now the public is in a dilemma of what to believe! Well, I am not interested in the accusation and counter-accusations being traded by the CBN and the affected bankers. My personal concern is the effect of this ill wind on the economy of Nigeria.

Can I still trust my banker?

Until this millenum, small scale entrepreneur in Nigeria were quite skeptical of using banks.  They trusted their ‘Esusu’ ‘Akawo’ and other local cooperative societies better than the banks. However, it is practically impossible to expand ones business and play in the bigger market without making use of banks. So, many were forced to imbibe the culture of using the banking system.

Beside this, the activities of petty thieves and armed robbers have thought many that it is not a wise idea keeping large quantity of physical cash at home. Also, the introduction of ATM machine encouraged many entrepreneurs who are merchants to imbibe the culture of using banks for transfering money from one location to another. Gone are the days when merchants travelling from Onitsha to Lagos or any other part of Nigeria carries money on their person while travelling. The ATM card is safer and more portable.

Unfortunately, the recent activities of the bankers has cast serious doubts on the mind of the small scale entrepreneurs. The reality is that the average small scale businessman in Nigeria is now scared of putting his/her little fund in the bank. But how can you transact business without using the banks. This remains a dilemma! It is common sense to note that the risk of getting robbed while keeping physical cash is higher and more probable than the risk of a bank getting distressed. However, if bankers tells lies blatantly and engage in shoddy deals with depositors fund, should an entrepreneur still trust them?

I’m sorry if I disappointed you by not providing an answer to the nagging question, “Should I still trust my banker?” I really feel bad that the effort to encourage the public to imbibe the culture of keeping cash in the bank and doing less of physical cash transaction has been badly crippled by the dishonest financial institutions. The truth is, people are really getting scared of entrusting their funds with bankers.

Is there no Solution?

I really wish the regulatory bodies (CBN etc.) will wake up to their duties. Their primary assignment is to prevent fraudulent and illegal practices among the financial institutions. Their effort should be concentrated on prevention (not catching culprits long after the loot has been spent!)

I personally don’t give any kudos to CBN for their performance so far. As far as I’m concerned, they are partly to blame for the rottenness in the financial sector. If their inspectors and auditors are men of integrity who prefer good name to bribe, they would have discovered and reported long ago on the anomalies occurring in those banks books. Since they failed to give accurate and honest report as at when due, then I see them as accomplices who encouraged the bankers to misuse depositors funds.

The issue of non-performing loans

The outcry of the CBN on the mamoth size of the non-performing loans being carried by the banks is another issue that deserve closer srutiny. It is a well known fact that the various tiers of government are owning local entrepreneurs working for them. Instead of using the public fund in the coffer to settle contractors who have completed their job, some political office holders embezzle such fund while hiding behind official beureacracy.

Some of the entrepreneurs accused of owing non-performing loans in  those banks have come out to defend themselves and accused the government of being responsible for their inability to repay what they owed as at when due. If the government agencies refuses to pay an entrepreneur as agreed in a contract, then what right has the same government to insist that such entrepreneur should repay loan taken to execute the same contract?

If EFCC is serious about helping to recover the non-performing loans, then they should start by querying the top government officials in those parastatals that are owing contractors. The accountant-generals, commissioners of finance etc of each state and local government should be asked to explain to the public why they are not meeting up with the contract agreement made with the local entrepreneurs. The truth be told, we will have a better Nigeria if our leaders believe in the slogan, Good Leaders, Great Nation!

I’ll love to hear your opinion on this issue. Share with us in the comment section. You can get updates to this post Can You Still Trust Your Banker by subscribing to Nigerian Entrepreneur RSS feed, Cheers.

9 Comments Comments For This Post I'd Love to Hear Yours!

  1. blake says:

    I definitely, definitely agree with your comments and feelings regarding the CBN.

  2. Margaret says:

    I recently came across your blog and have been reading along. I thought I would leave my first comment. I don’t know what to say except that I have enjoyed reading. Nice blog. I will keep visiting this blog very often.

  3. Sanusi is better a banker than an economist. We are missing Soludo thibb

  4. Anetta Henry says:

    no other way , i must trust my banker 😀

  5. Google-TCW says:

    Hi from google Google-TCW. I love your site

  6. I remember the day, this gist hit the news. Nna men, I quickly ran to scan the papers just to make sure that GTB was not one of them oh! My life savings for don dey at risk. LOL. Grandmama Cecilia Ibru just eff herself up. What an embarrassment! I’m impatiently waiting for Aunty Dora Akunyili to eff up big time. Ever since she left NAFDAC she’s been saying a whole lot of bs that’s been getting on my nerves. She don begin enjoy govt money.
    Abeg make we leave that one so as no to divert from the focus of this post. No mind me.

  7. anene@UK says:

    I must commend your blog/analysis of the nigerian banking sector. I’m only the greatest skeptics around but believe that for our economy to move forward, we can’t do with out the banking industry. No economy around the world can survive with out the banks. I was a bit worried when I read from the daily news about the troubled banks but at the end of the day we still need the banks to do one thing or another. The introduction of electronic banking in the industry is another area of concern. The banks are seriously exploiting their numberous customers of their hard earn monies. The other day I was going through my bank statement to reconcile my transactions. I was shocked when I discovered that my bank was making some deductions every month for a common debit card issued to me. This is crazy! No one told me about the charges before issuing the debit card. However, I have since the discovery asked my banker to cancel the debit. The cars is supposed to be free………..Every one naira counts! Nigerians should shine their eyes!

    Keep up the good work Nigerian Entrepreneur! Your website is simple and articles informative

  8. promotional drawstring bags says:

    Just like the uk nigerian bankers CBN cant be trusted to invest wisely.. To answer you question can you trust banker the answer is no, we have to put tighter controls on them as they are gambling with our futures

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