Following reactions to the Global Standing Instruction introduced by the Central Bank of Nigeria, the CRC Credit Bureau has given more insight into the new policy aimed at reducing non-performing loans in the Nigerian banking industry, thereby encouraging economic growth.
The GSI policy, which has taken effect since August 1, 2020, allows financial institutions to leverage on the Bank Verification Number and Credit Risk Management System platforms to recover bad loans.
Describing the new policy as a game-changer, the Director, Financial Policy and Regulation Department, CBN, Dr. Kelvin Amugo, explained that the policy would not only guarantee the financial stability in the financial system, but would also reduce the rate of un-serviced loans, improve loan recovery efforts and uphold responsive borrowing in the banking system.
He added that the new policy would help in ensuring that bank customers become more responsible in upholding their character when borrowing, saying the CBN was working towards including more financial institutions.
“CBN has commenced GSI enlistment for other financial institutions, especially the microfinance banks. We also want to bring on board the mobile money operators, because at the end of the day, we want the chain to be complete,” he added.
Stating the implications of the policy on customers, the Chief Risk Officer, Union Bank of Nigeria, Olajumoke Odulaja, announced that the policy would go a long way in correcting situations where a customer who has the capacity to pay back a loan refuses to pay.
She further explained that the policy would improve lending confidence, thereby bringing a decrease in interest rate.
“It is safe to also note that banks are not allowed to wrongly trigger the GSI mandate against a customer, as there are stiff penalties for banks that do that, ” she added.
