CBN unveils plan for closer monitoring of chronic bank loan defaulters from August

The Central Bank of Nigeria (CBN) on Monday announced a credit monitoring blueprint, planned to scale down the non-performing loan portfolio of the banking industry and keeping consistent defaulters under closer surveillance.

In a circular sent to all banks and other financial institutions, endorsed by Kevin N. Amugo – the regulator’s Director of Financial Policy and Regulation, CBN declared the bankers’ committee’s resolve at its 18th February meeting to enhance a more competent credit payment culture, minimise non-performing loans in the banking sector and place habitual loan defaulters on a watch list.

“The Central Bank of Nigeria in collaboration with stakeholders has developed the necessary protocols to facilitate a seamless implementation of the GSI process, including eligible loans granted from August 28, 2019,” the document titled Operational Guidelines on Global Standing Instruction (GSI) – Individuals said.

With the guidelines timed to tee off on 1st August, creditor banks are expected to facilitate borrowers’ education on GSI mandate including its implications and embed the details to the loan application process.

Read also: CBN to increase banks’ Loan to Deposit Ratio to 70%

By the same token, banks will assess and validate the GSI mandate instrument before granting loans.

The CBN said creditor banks will “indemnify NIBSS and other Participating Financial Institutions from all liabilities that may arise from inappropriate use of the GSI infrastructure” and keep record of physical version or digital copies of the signed GSI mandate and provide it upon request.

The GSI mandate agreement is to be executed between the participating financial institutions with the Nigerian Interbank Settlement System.

Banks now have a duty to implement a functional maintenance of qualifying accounts in a way that will be accessible to the NIBSS on the industry customer accounts database or by an alternative means established or made available for that purpose.

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