Bogus banking – The Nation

The announcement by the Nigeria Deposit Insurance Corporation (NDIC) that it would be commencing an investigation of some Deposit Money Banks (DMBs) for their failure to submit full returns on dismissed members of staff involved in fraud cases underscores the need for the nation’s banks to maintain the highest ethical standards.

The NDIC claims that it was moved to act because its off-site supervision revealed that fraud and forgery cases had increased significantly, with 320 cases of fraud caused by internal abuse reported in 2017, compared to 231 in 2016. Twenty- six responses from banks in 2017 showed that 26,182 cases occurred last year, compared to 16,751 in 2016. The amounts involved rose to N12.01 billion from the N8.68 billion reported in 2016, although the actual amount lost in 2017 was N2.39 billion as against N2.37 billion in 2016.

The main sources of fraud were internet/online banking, Automated Teller Machine (ATM) and card-related, together accounting for 92.68 per cent of all related cases, and representing N1.51 billion or 63.66 per cent of all losses in 2017.

It is clear from these figures that insider-related fraud in banks is increasing significantly, and while not all of them can be attributed to the connivance of staff members of banks, they are involved to a worrying degree. This is where the refusal of some banks to make full returns on such staff to the NDIC becomes troubling.

The corporation claims that 22 licensed commercial banks and four merchant banks made 286 returns on workers dismissed for their involvement in forgeries and fraud. It is unclear whether the NDIC is saying that this figure is incomplete, either in terms of the reporting banks or the number of returns, but if it feels that the situation is serious enough to warrant investigation, then there is a problem.

It is a problem whose gravity cannot be underestimated. Nigeria’s banks play a pivotal role in the nation’s economy, especially in the mobilisation of savings which are injected into viable projects by way of loans. Their ability to perform this function efficiently is critically dependent on public perceptions of them as trustworthy organisations founded on an unwaveringly ethical approach to doing business.

Such trust is eroded when increasing numbers of staff members are involved in fraudulent activities; it is further worsened when the banks themselves decline to make full disclosure to the NDIC, whose remit it is to see that they are keeping to the rules that guarantee their solvency.

Banks have not helped matters, with many garnering unsavoury reputations for fleecing their long-suffering customers through outrageous bank charges, ludicrous foreign exchange and interest rates, and often-cumbersome online transactions. If money cannot be kept at home because it is intrinsically unsafe, and supposedly “secure” banks are vulnerable to fraud from their own employees, customers are placed in an unwelcome situation of double jeopardy.

The country’s banks know the value of reputation more than anyone else. It is therefore incumbent upon them to develop strategies which ensure that their integrity is never in question. The answer is not in producing glossy advertisements which make improbable claims to ethical conduct and efficiency; the NDIC’s announcement only underscores their hollowness.

Banks can truly prove their worth when they subject themselves fully to regulators like the Central Bank of Nigeria (CBN), the Securities and Exchange Commission (SEC) and the NDIC. These agencies are charged with the task of keeping banks honest, regardless of whether it is convenient for them to do so or not.

All banks should fully cooperate with the NDIC’s impending investigation and provide full details of their members of staff who were dismissed due to their involvement in fraudulent activity.

Incidentally, the practice of quietly letting most indicted staff go without handing them over to the police for prosecution is yet another way in which banks put themselves ahead of public interest. The protection of their own reputations appears to be more important than the punishment of criminal acts which often cause great distress to the victims.

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