‘Bad loans in banking operations, a normal occurrence’

Bad loans in banking operations is a normal occurrence, Mr Dele Oyekanmi, the Managing Director, MoneyWise Microfinance Bank, Lagos, said on Sunday. Oyekanmi told the NAN in Lagos that no matter how performing a loan might be, at least one per cent of the total loans “must be bad”.
He attributed the situation to the high interest rates on lending. Oyekanmi said that interest on loans should be made affordable to customers to enable them to repay when due.
“When loans are given out to customers at low interest rates, definitely it will be easier for them to pay back on time.
“In credit policy, there is a general provision that even if all your loans are good, there must be one per cent that will be bad. That is the bad loan, so there must be a bad loan,” he said.
Oyekanmi, also the Chairman, Ikeja chapter, National Association of Microfinance Banks, said the business of microfinance started on a rough terrain way back in 2005.
According to him, the sub-sector has improved with the various policy framework of the Central Bank of Nigeria (CBN) and other regulatory bodies.
He said both the operators and regulators were learning at the same pace, noting that with time, microfinance bank would be an institution to be reckoned with. `
`Where we get it wrong, we fine tune it. So we are getting better. “In the nearest future, microfinance institutions will dominate the financial sector of the economy,” he said.