CBN: Chronic loan defaulters in a tighter hook

Our Abuja reporter│ 17 July 2020 │ 10:00

Beginning on August 1, 2020, banks in Nigeria will have the power to debit loans and accrued interests due from bank accounts of loan defaulters across the Nigerian banking system.

The Central Bank of Nigeria (CBN), on July 14 issued a new guideline to this effect, implying the seizure of debtors’ fund across the banks. The Apex bank has once again reinforced its commitment to strengthening the financial services sector.

According to a circular issued by the CBN Director, Financial Policy and Regulation Department, Kevin Amugo, this initiative aims to improve the credit repayment system, reduce non-performing loans in the banking system and watch-list consistent loan defaulters.

This operational guideline is tagged ‘Global Standing Instruction’ (GSI). The Nigeria Inter-Bank Settlement System Plc (NIBSS) will manage the entire operations of the GSI on behalf of banks, using customers Bank Verification Numbers (BVN).

This initiative, which has been underway since May 2019, is based on a prolonged series of agreements involving the CBN, NIBSS and the Bankers’ Committee.

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