BVN as Game-changer for Improved Lending to Real Sector via thisdaylive
The BVN 2.0 may prove to be the magic wand in CBN’s numerous measures aimed at encouraging the commercial banks to provide credit to the real sector, writes James Emejo
The CBN also recently introduced new regulations to cap banks intervention in securities, particularly treasury bills and federal government bonds, urging them to redirect support to the real sector. A major concern on the part of the banks was also the alarming rate of loan default, which the banking industry has had to grapple with the recent scenarios, where most of loans to oil and gas as well as power projects, had become bad debts, giving room for renegotiation. This lends credence to banks’ apathy for lending.
Stakeholders have described the initiative, which was code-named BVN 2.0 as capable of returning sanity in the financial sector as well as enhancing consumer credit. “Basically, it would contain the Bank Verification Number details of the customers and the Tax Identification Number of the customers and more or less, it will be a commitment by the customers taking the loan from government. In taking the loan, you would agree that you would not default.”
She added that the new clause would enable the banks to lend more with more confidence and enable more Nigerians, in particular those in the MSM’s retail sector to get access. Emefiele had said: “We do know that banks have often expressed some resistance to increasing credit to the private sector given the past experiences they’ve had about NPLs that result from this.
“In different parts of the world, people go to the shops and they should be able to buy things on credit.
“And I do think that with the steps that would be taken by the CBN to support the bank through administrative, legal and regulatory framework, that certainly we would see to it that NPLs are brought down so that deposit money banks can be encouraged to go back and begin to lend more aggressively to those sectors that they consider to be risky.”
He said: “If you owe a bank, you should pay and if there is a problem, they can restructure the loan to suit those situations. Some have the ability, but not the willingness to pay and that is what this process would check.”
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