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

creditor banks must "indemnify NIBSS and other Participating Financial Institutions from all liabilities that may arise from inappropriate use of the GSI infrastructure
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Central Bank of Nigeria (CBN) Governor Godwin Emefiele

The Central Bank of Nigeria (CBN) unveiled on Monday a blueprint for credit monitoring, intended to scale down the banking industry's non-performing loan portfolio and keep regular defaulters under closer supervision.

In a circular sent to all banks and other financial institutions, endorsed by Kevin N. Amugo – the Director of Financial Policy and Regulation of the regulator, at its meeting on 18 February, CBN declared the resolve of the bankers' committee to enhance a more competent culture of credit payment, minimize 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 scheduled to tee off on August 1st, creditor banks are required to promote GSI requirement education for borrowers including their consequences and insert the information into the loan application process.

By the same token, before awarding loans, banks must test and verify the GSI mandate instrument.

The CBN said creditor banks must "indemnify NIBSS and other Participating Financial Institutions from all liabilities that may arise from inappropriate use of the GSI infrastructure" and maintain records of the physical version or digital versions of the GSI mandate signed and supply it on request.

The GSI mandate arrangement with the Nigerian Interbank Settlement Scheme is to be implemented between the participating financial institutions.

Banks now have an obligation to introduce a consistent management of qualified accounts in a manner that will be open to the NIBSS on the database of industry customer accounts or by an alternative means that has been developed or made available for it.

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