CBN Says Banks To Debit Loan Defaulters From August I
By UDO ONYEKA
The Central Bank of Nigeria, CBN, has given banks operating in the country a go ahead order to debit loans and accrued interest due from bank accounts of loan defaulters across the banking industry.
This was disclosed in a circular on the CBN website issued to all banks and other financial institutions tagged ” Operational Guidelines On Global Standing Instructions, GSI, – Individuals.”
The Guidelines which are expected to take off from August 1, 2020 will be implemented in collaboration with the Nigeria Interbank Settlement System (NIBSS).
The Global Standing Instruction, GSI, under which the plan will run, empowers banks to debit borrower’s accounts with the loan amount and accrued interest of defaulters across the Nigerian financial system.
Qualifying accounts include savings accounts, current accounts, domiciliary accounts, domiciliary accounts, investment accounts and joint accounts.
The NIBSS will manage the entire operation of the GSI on behalf of the banks using customers Bank Verification Numbers, BVN.
The circular which was signed by Directr, Financial Policy and Regulation, CBN, Kelvin Amugo Stated. “The Bankers’ Committee, at its meeting on February 18, 2020, approved the go-live on the Global Standing Instruction, which aimed at facilitating an improved credit repayment culture; reducing non-performing loans in the Nigerian banking system; and watch-listing consistent loan defaulters.”
“The banks would review and validate the GSI mandate instrument prior to loan disbursement,” the Statement added.
The CBN added that the banks would retain copies of physical or digital version of the executed GSI mandate and provide same when required.
According to CBN, the participating financial institutions must execute the GSI mandate agreement with NIBSS.
It stated, “They must also ensure all qualifying accounts were properly maintained and visible to NIBSS on the industry customer accounts database or by any other service created or provisioned for purpose.”
