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Banks to debit loan defaulters from August 1 –CBN

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Bank of Nigeria (CBN) has given the green light for banks to debit loans and accrued interests due from bank accounts of loan defaulters across the banking system.

This was disclosed in a circular on the apex bank’s website issued to all banks and other financial institutions tagged ‘Operational Guidelines on global standing instruction – Individuals.’

According to the CBN, the guideline is expected to take effect from August 1 2020. The GSI guideline gives banks power to debit loan and accrued interest due from bank accounts of loan defaulters across the Nigerian banking system. The Nigeria Interbank Settlement System (NIBSS) will manage the entire operations of the GSI on behalf of banks using customers’ Bank Verification Numbers (BVN).

“The Bankers’ Committee, at its meeting on February 18, 2020, approved the go-live on the Global Standing Instruction, which aims 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. They would indemnify the Nigeria Inter-Bank Settlement System and other participating financial institutions from all liabilities that may arise from inappropriate use of the GSI infrastructure,” it added.

The CBN added that the banks would retain copies of physical or digital version of the executed GSI mandate and provide the same when required while adding that 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 this purpose.”

Omodele Adigun and Chinwendu Obienyi The Central Bank of Nigeria (CBN) has given the green light for…

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