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The Central Bank of Nigeria (CBN) has said that it has handled cases involving 26,057 accounts valued at N1.660 billion. The cases were observed between August 1 and 9, 2020, when it commenced the implementation of the Global Standing Instruction (GSI) introduced to checkmate the growth of non-performing loans (NPLs) in the Nigerian banking system.
The GSI, whose implementation commenced this month, gives banks the power to debit loans and accrued interest due from bank accounts of loan defaulters across the Nigerian banking system. The Nigerian Interbank Settlement System manages the entire operations of the GSI on behalf of banks using customers’ Bank Verification Numbers (BVN).
CBN Director of Financial Policy and Regulation, Mr. Kevin Amugo, said yesterday at a virtual conference with the theme: ‘Non-Performing Loans and Global Standing Instruction Policy: Impact and Insight for Financial Stability,’ that the implementation of the policy in the first nine days in August led to the recovery of N50 million.
Amugo, in his keynote address during the Chartered Institute of Bankers of Nigeria (CIBN) third advocacy dialogue, added that the level of recovery would grow significantly when corporate accounts and other deposit financial institutions are included in the GSI protocol.
He said: “This recovery today may appear small but it is not little because it will grow when we include corporate accounts.
“What we have done is the first tranche of the GSI policy, which is limited to individual accounts. We will soon release the operational guidelines that will extend it to corporate accounts. Then the level of recovery will be quite huge, also from the recovery so far recorded, loan recovery under the GSI might not be 100 percent”.
He explained that the mandate to trigger an account must be initiated by the lending bank only on non-performing accounts that must have been existing in the CRMS for a minimum of 90 days in line with the prudential guideline classification.
“It is only the loan amount and the accrued interest that will be triggered without including the charges,” he added.
He continued: “But the good thing about it is that there are no hiding places any longer for the predatory borrowers. Wherever their accounts are, as long as they are in the banking system, they are open to being accessed if they have defaulted on their loan obligations with their banks.
“The GSI only mirrors what we have in banks’ loans documentation records and enables a bank in the case of loan default to aggregate all the accounts of the customer in other banks that are not loan accounts to be able to offset the debt of the customer to it.
Other participants in the policy dialogue that were drawn from the organised private sector, the legal system and operators of the Nigerian financial system, described the GSI policy of the CBN as a welcome development that would boost availability of credit facilities for the growth of the Nigerian economy.
The President of the Chartered Institute of Bankers of Nigeria (CIBN), Mr. Bayo Olugbemi, noted that the scourge of bad loans has been a long-standing menace to the Nigerian banking sector and described the introduction of the GSI as a new dawn in credit management and debt recovery process in our clime.
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