A financial expert, Okechukwu Unegbu, has decried the proliferation of “loan sharks” in the Nigerian financial system, describing them as dangerous to the economy.

Mr Unegbu, a past president of the Chattered Institute of Bankers of Nigeria (CIBN), said this on Sunday in Abuja.

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

“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 in 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,” he said.

Loan sharks are digital lending platforms that offer loans at extremely high-interest rates and often use threats to collect debts.

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 pressure, intimidation, harassment, humiliation or threat.

According to the regulation, institutions shall engage and give customers notices of outstanding obligations prior to the commencement of a debt collection.

Also, the apex bank had said individuals in need of funds should approach regulated institutions and desist from borrowing from loan sharks.

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.

Meanwhile, the federal government recently approved 173 digital lending platforms to operate in the country.

According to the Federal Competition and Consumer Protection Commission (FCCPC), the approval is to protect citizens from the atrocities of loan sharks.

Some of the approved loan apps are Sycamore Integrated Solutions Limited, Trade Depot, Tajow Investment, Blue Ridge MfB, Grolatech Credit Limited, Branch International Financial Services Limited and P2vest Technology Limited.

Others are Creditwave Finance Limited, Keenest Tech Service Limited, FairMoney MfB, Altracred Finance Investment Limited, Crevance Credit Limited, Menacred Company Limited, Afrowide Development Limited, Red Planet Nigeria Limited, Afrofirst Mobile and Technology Company Limited.

There are also Rankcapital Limited, IBS Golden Investment Company Limited, Lendvisery Services Limited, Renmoney MfB, GTB Quick Credit App, ALAT by Wema, among others.

(NAN)