No hiding place for debtors as CBN changes rules giving commercial banks unlimited power to collect bad debts

  • In order to ensure that the number of non-performing loans in the country is kept to an absolute minimum, the Central Bank of Nigeria has amended its loan recovery loan
  • The amended rule gives commercial banks unlimited power to ensure that customers who have accessed loans repay
  • The CBN said the move was part of its mandate to promote financial system stability and reduce non-performing loans

The Central Bank of Nigeria (CBN) has amended the Global Standing Instruction (GSI) Operational Guidelines.

According to the CBN, the revised guidelines will allow for ongoing monitoring and unrestricted loan recovery by depository banks (DMB) and financial institutions in the country.

CBN also said that GSI generates a contractual mandate from an individual borrower to a creditor bank to use funds to the borrower’s credit at a third-party financial institution or e-wallet to balance the borrower’s debts.

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No hiding place for debtors as CBN changes rules giving commercial banks unlimited power to collect bad debts
CBN pledges to reduce the problem of non-performing loans in the country
Source: Getty Images

The CBN announced this in a circular titled “Re: Global Standing Instruction (GSI) – Individuals”, dated January 19, 2022, signed by Chibuzo Efobi, CBN Director, Policy and Regulations Department, and issued to all banks and other financial institutions.

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According to the circular, the frequency of recovery attempts through the GSI platform has changed from a set number to continuous and unlimited as a result of the adjustment.

The bank went on to say that GSI’s automated loan recovery feature, which applies to all industry loans, would remain in effect indefinitely for the life of the loan and/or until the debt is fully repaid. , ThisDay reports.

The guideline also included a list of fines that can be imposed on banks and financial institutions if the GSI is violated or misapplied.

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In July 2020, the central bank announced a GSI directive aimed at improving debt collection and monitoring chronic defaults.

The project was created primarily to address the industry’s recurring cases of willful default in order to identify and monitor stubborn borrowers.

It also aims to improve loan recovery from all qualified and funded accounts/portfolios in the banking sector, as well as improve loan repayment culture and reduce non-performing loans (NPLs) in the Nigerian banking system.

AMCON set to dishonor 7,912 Nigerians who are notorious bank debtors

Meanwhile, the Asset Management Corporation of Nigeria is set to release the names of 7,912 chronic debtors who have defaulted on loans taken from banks.

AMCON, the body in charge of asset recovery in Nigeria, said it would name and shame defaulting debtors from January.

The body has given debtors time to plan a payment plan to avoid the embarrassment of seeing their names in the national dailies soon.


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