A Nairalander Shares His Experience With Bank Of Industry (Documents Attached)
I apologize for the length of this story which is an illustration of the lip service our government has been paying to the encouragement of agriculture and private enterprise in Nigeria.
MY APPLICATION
In July, 2017, I submitted an application for a loan of five million, nine hundred and two thousand naira only (N5, 902, 000.00) at the Makurdi, Benue state branch of Bank of Industry. At the initial stage, I was very impressed by what I thought was the professionalism demonstrated by staff of the bank. I got a call on the 31st August 2017 notifying me of the approval of my loan. You can only imagine how delighted I was at the prospect of such a lifeline to my business considering the loan had a tenor of 3 years, moratorium of six months and purported interest of less than 10% per annum and given that my loan officer gave me the impression that now that the loan had been approved, disbursement was going to be a matter of days or weeks at the most.
I was therefore very surprised to say the least when 2 months down the line, I was yet to receive an offer letter under the pretext that searches were been carried out on my person and on my business. I patiently waited while inundating Bank of Industry Makurdi office with calls and visits. It was not until early November, 2017 that I received a call informing me that the searches came clean and my offer letter was now ready. I went to the office and asked to receive my letter but to my surprise, I was asked to pay a non refundable fee of 1% of the amount approved for me before I could even view the letter. This part sounded almost criminal to me, why won’t I see the terms governing the purported offer before committing resources I did not have? They told me it was the norm and that there was no other way so I went ahead to pay the sum of Fifty Two Thousand Naira (N52, 000.00) being 1% of the sum approved. See receipt of the payment attached.
Thereafter, I received a 6-paged offer letter in which I found ridiculous terms that made me wonder why a government agency whose objective was the encouragement of entrepreneurship could be that devious and self interested. See some details:
1.) The approved loan amount was five million, one hundred and ninety four thousand, three hundred and twenty two naira (N5, 194,322.00). A good percentage of this approved sum was for fees and charges which did not add any direct value to my business and which were at the exclusive discretion of the bank.
2.) The source was FGN (NEDEP) fund.
3.) It was to be discharged towards the procurement of items of equipment and raw material for my business. In other words, I was not supposed to get a kobo in cash, my suppliers were meant to get payment after they had supplied the materials I required.
4.) I also found in addition to other 8 conditions all of which I had met that I was meant to pay another security arrangement of 10% of the approved loan amount being Five hundred and nineteen thousand, four hundred and thirty two naira twenty kobo (N519,432.20)
5.) No legal action could be instituted howsoever instigated and/or sustained by my company against Bank of Industry jointly or severally without first giving BOI a ninety (90) day prior written pre-action notice of my company’s intention to so proceed against Bank of Industry.
6.) Bank of Industry’s ability to accommodate this facility within its legal lending limits was subject to availability of funds. This left me wondering why the bank will approve my application, collect a non refundable fee of 1% of the approved amount without first determining funds’ availability.
7.) The mother of all frauds in the offer letter was that if the loan was not disbursed within 2 months from the date of the letter of offer (31st October, 2017), the Bank of Industry without any consideration of why it was not disbursed reserved the right to review the terms and conditions of offer but if the loan was not disbursed within 3 months from the date of the letter of offer, the letter lapses and all expenses incurred by the bank shall be repaid by my company.
8.) If the offer letter contained unfriendly terms, you can only imagine what the 20 paged loan agreement proper contained. On the whole, the terms of the loan agreement was such that the bank was more than 100% covered while I and my 2 guarantors were made to bear all the risks and every legal obligation/responsibility.
This was the greatest source of my fear as it all meant that the bank could afford the highest form of irresponsibility and recklessness as far as the loan and its disbursement was concerned and not face any consequence whatsoever. However, not only did I need the loan, at this point I had invested so much resource in money, time and energy that I felt the need to see it all through. So I stayed interested nonetheless.
{To be cond} Meanwhile, feel free to share this story or post any similar experience you have had with BOI or any other government agency.
MY APPLICATION
In July, 2017, I submitted an application for a loan of five million, nine hundred and two thousand naira only (N5, 902, 000.00) at the Makurdi, Benue state branch of Bank of Industry. At the initial stage, I was very impressed by what I thought was the professionalism demonstrated by staff of the bank. I got a call on the 31st August 2017 notifying me of the approval of my loan. You can only imagine how delighted I was at the prospect of such a lifeline to my business considering the loan had a tenor of 3 years, moratorium of six months and purported interest of less than 10% per annum and given that my loan officer gave me the impression that now that the loan had been approved, disbursement was going to be a matter of days or weeks at the most.
I was therefore very surprised to say the least when 2 months down the line, I was yet to receive an offer letter under the pretext that searches were been carried out on my person and on my business. I patiently waited while inundating Bank of Industry Makurdi office with calls and visits. It was not until early November, 2017 that I received a call informing me that the searches came clean and my offer letter was now ready. I went to the office and asked to receive my letter but to my surprise, I was asked to pay a non refundable fee of 1% of the amount approved for me before I could even view the letter. This part sounded almost criminal to me, why won’t I see the terms governing the purported offer before committing resources I did not have? They told me it was the norm and that there was no other way so I went ahead to pay the sum of Fifty Two Thousand Naira (N52, 000.00) being 1% of the sum approved. See receipt of the payment attached.
Thereafter, I received a 6-paged offer letter in which I found ridiculous terms that made me wonder why a government agency whose objective was the encouragement of entrepreneurship could be that devious and self interested. See some details:
1.) The approved loan amount was five million, one hundred and ninety four thousand, three hundred and twenty two naira (N5, 194,322.00). A good percentage of this approved sum was for fees and charges which did not add any direct value to my business and which were at the exclusive discretion of the bank.
2.) The source was FGN (NEDEP) fund.
3.) It was to be discharged towards the procurement of items of equipment and raw material for my business. In other words, I was not supposed to get a kobo in cash, my suppliers were meant to get payment after they had supplied the materials I required.
4.) I also found in addition to other 8 conditions all of which I had met that I was meant to pay another security arrangement of 10% of the approved loan amount being Five hundred and nineteen thousand, four hundred and thirty two naira twenty kobo (N519,432.20)
5.) No legal action could be instituted howsoever instigated and/or sustained by my company against Bank of Industry jointly or severally without first giving BOI a ninety (90) day prior written pre-action notice of my company’s intention to so proceed against Bank of Industry.
6.) Bank of Industry’s ability to accommodate this facility within its legal lending limits was subject to availability of funds. This left me wondering why the bank will approve my application, collect a non refundable fee of 1% of the approved amount without first determining funds’ availability.
7.) The mother of all frauds in the offer letter was that if the loan was not disbursed within 2 months from the date of the letter of offer (31st October, 2017), the Bank of Industry without any consideration of why it was not disbursed reserved the right to review the terms and conditions of offer but if the loan was not disbursed within 3 months from the date of the letter of offer, the letter lapses and all expenses incurred by the bank shall be repaid by my company.
8.) If the offer letter contained unfriendly terms, you can only imagine what the 20 paged loan agreement proper contained. On the whole, the terms of the loan agreement was such that the bank was more than 100% covered while I and my 2 guarantors were made to bear all the risks and every legal obligation/responsibility.
This was the greatest source of my fear as it all meant that the bank could afford the highest form of irresponsibility and recklessness as far as the loan and its disbursement was concerned and not face any consequence whatsoever. However, not only did I need the loan, at this point I had invested so much resource in money, time and energy that I felt the need to see it all through. So I stayed interested nonetheless.
{To be cond} Meanwhile, feel free to share this story or post any similar experience you have had with BOI or any other government agency.
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