People & Money

BOI Denies Giving Unsecured Loans

The Bank of Industry has described as untrue and misleading some online media reports that it undertakes unsecured lending.

In a statement by the management of the bank on Wednesday, it said,” Our attention has been drawn to an erroneous online report recently published about the Bank of Industry Ltd (BOI). Ordinarily the Bank would not respond to such glaringly false reports but for the sake of our numerous stakeholders we thought it necessary to set the record straight.

“As a matter of strict credit policy, BOI does not lend money without collateral security.

“Over 93% of BOI loans are secured with bank guarantees of commercial and merchant banks and or Federal Government Bonds / Treasury Bills.

“Foreign and local lenders to BOI require the bank to utilise these collaterals for lending as a condition for their lines of credit; so all the monies we borrow overseas are safely sterilised with the Central Bank of Nigeria (CBN). Also, all on-endings from the foreign loans are first verified by CBN before subsequent release of funds is made.

“The remaining 7% of the loan portfolio are secured with legal mortgages and / or debentures as well as guarantees.

“BOI runs a world-class transparent credit process that is extremely robust with strong internal control systems that is supervised and reviewed extensively by the banks Board of Directors on a consistent and regular basis.”

Also Read: Fitch Ratings: Bank of Industry’s Outlook Upgraded to “Stable”

According to the statement, BOI is audited by a world-class auditing firm, KPMG, whose yearly audit reports are reviewed by the Banks Board of Directors and submitted to the CBN for approval before publishing.

Also, the CBN annually conducts onsite extensive examination of the books of BOI. The Management has consistently responded satisfactorily to any issues raised by their examinations.

The statement explained that the CBN requires Banks to maintain non-performing loan (NPL) ratio of 5% or less. BOI’s NPL as at December 31st 2020 was less than 3%.

It said, “The Auditor General of the Federation also conducts yearly examination of the books of BOI and the Management has consistently responded satisfactorily to issues raised by their audits. For the avoidance of doubt, in the example cited by the reports, the Bank approved a total of N4.6bn in credit facilities to two of its customers, with both facilities secured by Bank guarantees contrary to what was reported.

“Both the Senate and House of Representative Committees also perform yearly oversight review of the operations of the bank. Both arms of the national assembly have access to all audit reports and examinations of the bank and have consistently expressed satisfaction with the banks operations.

According to the statement it is therefore mischievous to suggest that BOI lends money without collateral security. 

The Bank advised the public to ignore the false reports as they are entirely untrue and without substance.

“The Management of the Bank remainsfocused on delivering on our mandate to supportindustries by catalysing the expansion of local industries and reactivation of ailing ones while supporting green fields,” the statement said.

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