This is not accounting. Neither is it economics.
It is banking.
An approved loan amount is different from the amount drawn down.
The amount actually drawn down is the amount the borrower has utilised and, subject to repayments and other contractual charges, owes the bank.
He is simply explaining that a borrower can have an approved credit limit of ₦10 billion but draw down only ₦100 million.
The borrower does not owe ₦10 billion simply because that amount was approved.
The actual loan exposure arises from the amount disbursed and outstanding, not merely the approved facility limit.
That is precisely why he used the term "drawdown"
🤣🤣🤣🤣🤣 This Zobo Man.
In credit, underwriting and risk assessment, there’s one thing I must tell this former Chairman of Fidelity Bank.; i know it’s been long but, first it looks like Obi reasons alone and goes to the press solo, he don’t discuss with his team first ?
Once you borrow money, you owe.
If the money sits untouched in your account, you still owe. If you choose not to use it, you still owe.
The cost of capital doesn’t stop because you didn’t spend the money. Interest accrues according to the facility terms, and management fees and other applicable charges are part of the cost of the facility.
That is basic credit reality. A loan is not free money simply because you leave it sitting in your account.