Good day Nairaland
There is an issue I need clarification mostly from bankers (especially those in Loan/debt recovery unit/department. A close neighbourhood borrowed 650,000 from First bank in ‎2006 as an overdraft via his current account and used one of his savings account in the same bank with a sum of 500,000 as collateral.

Due to issues and hardship beyond his control he was unable to service the overdraft according to terms and conditions stated. As a result, the bank thereafter in 2007, to avoid further accumulation of interest and penalty charges realised the 500,000 in saving account. Following this action of the bank audit, the outstanding balance on the current account became 173,061.20 in August, 2007. However, my neighbour applied for waiver and related issues but never received any response from the bank. Consequently, the outstanding balance of 173,061.20 plus interest and penalty charges kept accumulating.

The bank official then came back to him in December, 2011 and told him that the outstanding balance has accumulated to 323,974.40 at 26/July/2011. However, the bank headquarters has made 100% for the outstanding balance of 323,974.40 in compliance with the CBN prudential guideline in effect from July, 2010. Furthermore, that interest n penalty charges has been stopped and my neighbour should pay the 323.974.40.

My neighbour agreed to be paying between 10,000 to 20,000 every month. The bank official now gave him a separate account number and the titled was "DEBT/LOAN RECOVERY ". According to them the account is an internal account within d bank for recovery of debt. Furthermore, that a recovery account has been created by d bank to reflect any payment made by him. My neighbour made a total payment of 100,000 into the account in the year 2012. This amount has been confirmed by the bank manager in 2013.

Yesterday being 1st December 2015 he went to d bank to inquire about the outstanding balance to pay up. The new bank business manager told him that he is now owing 640,049.12. That interest n penalties are still accumulating on a recovery account created on his debt that has been classified as a loss facility. My neighbour became amazed and called the former manager (though retired). The former manager told him interest n penalty is not running on a recovery account created on his debt.

My question now is:
Can interest and penalties be running on a debt recovery account other than the account with which the overdraft was gotten?
What is a debt recovery account and how does it function that it is only available n viewable only by d bank official and not be given to d customer associated with it?

The debt recovery account is a different account from which the overdraft was gotten. Attached here with is the bank statements of the account the overdraft was gotten printed from the bank on 29th october,2012.

Some bankers around have not been to provide answers rather they refer me to bankers in loan/debt recovery unit/department

Your sincerely, unalloyed and undiluted advise will be vehemently appreciated.