There is no longer hidden place for loan defaulters, as Bankers’ Committee, an umbrella body of the Central Bank of Nigeria’s officials and Managing Directors of Deposit Money Banks, has agreed to begin offsetting unpaid loans by borrowers with their deposit assets in other bank accounts.
The committee explained that the forfeited funds would be used to service loans that have been defaulted on, which would eventually aid the reduction of credit aversion by the banks, and help banks that are yet to meet up with the required Loans to Deposit Ratio of 60 per cent by September 30.
Speaking to the newsmen at the post bankers committee briefing in Lagos, the CBN’s Deputy Governor, Financial Services System, Aisha Ahmed, said this new directive would boost consumer credit, by making funds available to other honest loaners and in turn improve purchasing power to stimulate economic growth.
Ahmad, however, explained that the new offer letters would require the Bank Verification Number of the customers, while the customer would be made to sign a new clause that states: Funds in accounts with other financial institutions be used to service loans when default occurs.
She noted that by implementing this initiative, credit growth of N1tn was projected to be added to the industry.
On the drive to improve credit access to the creative industry, Herbert Wigwe, chief executive officer, Access Bank, said the bankers were collaborating with the Lagos State Government in a pilot agreement towards developing adjourning areas of the National Theatre.
He said the bankers’ agreement to support four key areas, which are music, fashion, Nollywood and Information Technology hubs are due to their significance on the economy and their ability to engage a lot of the Nigerian youths.
Nigerian Banks have recently succeeded in bringing down the ratio of industry Non-performing Loans to a single digit.
On whether the new directive won’t hamper progress already made with NPLs, the bankers noted that adequate credit scoring would be implemented on would-be obligors.
Ahmed Abdullahi, director of banking supervision, explained that individuals would now be able to obtain credit scores, and the scores will help banks to rate obligors.
“If you are not credit worthy, you would not be able to access loans”, he said.