The House of Representatives yesterday urged the Central Bank of Nigeria (CBN) to direct Nigerian Banks to stop collecting insurance fees on loans granted to customers. The House also mandated it’s committee on Banking and Currency to investigate the anomalies of the shady deals of Banks on insurance fees being charged on loans granted to Customers, and report back to the House within four weeks for further legislative action. The lower legislative assembly unanimously passed a motion sponsored by Hon. Ayeola Abayomi Abdul-Kabir, who represents Ibeju Lekki federal constituency in Lagos state.
Ayeola argued that it was a universal practice for Banks to demand for substantial collaterals, especially landed property, as security for loans granted to their customers to ensure that a bank does not lose its money in the event of a borrowers death or inability to repay the loan.
He added that apart from the collaterals taken from borrowers to secure the loans granted to them, Nigerian Banks have made a practice of charging borrowers heavy sums of money as insurance fees on the loans which may sometimes be up to 1½% of the loan granted.
According to Ayeola, the payment of insurance fees on loans is an additional burden on borrowers and serves as one of the factors discouraging many businessmen from taking Bank loans to grow or expand their businesses.
“What I am saying is that the banks charging customers insurance on loans is not normal. Before they will grant loan, enough collateral was taken from the person, the banks are the ones taking the risk but the customers are paying for the insurance, Nigerian bank should stop extorting people,” he said.
The member representing Ayedaade/Irewole/ Isokan federal constituency in the state of Osun, Hon. Ayo Omidiran, while supporting the motion, said it would ease the pain of borrowers
