Banks woo Senators, Reps with N225m loan

Posted by admin Legislature, Senate Monday, August 22nd, 2011

Senators and members of the House of Representatives are presently being wooed by banks to take up loans ranging from N150 million, N75 million and N30 million.

Each member of the 469-National Assembly is being wooed with the loans to settle personal needs as well as settle down quickly in the expensive Federal Capital Territory (FCT).

Unlike regular banking practice, where prior collateral is needed before any loan can be granted, federal lawmakers are pampered in such a way that, the same property they are being wooed to purchase would be used as collateral for such loans.

The repayment plan is two-fold: (1) Equal quarterly repayment of principal interest or (2) equal quarterly repayment of principal and interest payment on monthly basis. Details of the loan plan, a copy of which was obtained by Daily Sun showed that the N150 million loan for example is couched as a “mortgage facility to finance the purchase of a house in Abuja.”
The tenor is 42 months with a fixed annual interest rate of 15 percent.

The payment mode has been spread out to cover the entire four years tenure. Lawmakers in the Seventh National Assembly have an exit date of June 2015, barring death. The banks would collect a 1percent management fee while the collateral Is “lien on original title deed of the property or Deed of Sublease of the property to be financed.” Another juicy part of the deal is that, the bank involved would offer the lawmaker “comprehensive insurance over the property to be financed.”

Personal loans are in two categories: one is to solve personal needs which has a repayment plan of 24 months while the other spans 42 months. The first personal loan is N30 million meant to help lawmakers settle pressing personal needs with a fixed annual interest rate of 16.5 percent. The repayment source is simply from “proceeds from quarterly allowance and monthly salary” of any willing lawmaker.

The same condition for the repayment is the same given for taking the mortgage facility. For this category of loan, however, the collateral is “domiciliation of (the) quarterly allowance” of the lawmaker. The third category of loan is tagged “Equity Lease” and the amount is N57 million, also meant to solve personal needs, but with a tenor of 42 months at a fixed interest rate of 15 percent per annum. As with the former, the repayment source is proceeds from quarterly allowance and monthly salary with the same repayment plan as the first two sets of loans.

The collateral for this category is the same as that of the loan to buy the house in Abuja. Shortly after the inauguration of the National Assembly in June, some lawmakers were dismayed at the sale of the Apo Legislative Quarters to members of the Fifth National Assembly by former President Olusegun Obasanjo.
They pleaded that the sale be reversed, as most of the lawmakers are new in Abuja without anywhere to stay except a recourse to staying in hotels.

Regardless, returnee Senators and members of the House of Representatives are still groaning under the weight of loans obtained for the April polls. Some obtained as much as N170 million which was deployed to prosecute the National Assembly poll on April 9.

Some lawmakers, who declined to be named, but who obtained loans in the last session who have also been approached for fresh loans insist that any new loan “is out of it.”

-Sunwp_posts