No More Hiding Place for Loan Defaulters
Individuals and companies, who have the habit of borrowing from banks, with the intention of not paying back, may now have to change their mindsets as there will no longer be a hiding place for them within the banking industry. The agreement reached recently between the banks and Central Bank of Nigeria is that any loan defaulter’s monies in other banks should be drawn to settle their debt with any bank.
Meanwhile, the CBN said the GSI, which was developed in collaboration with stakeholders, should be the last resort used by a bank to settle loan defaults.When it becomes operational, the Bankers’ Committee of the CBN, which is the biggest beneficiary of the initiative, has agreed that loan defaults will be settled using customers’ deposits in other banks. The Bankers’ Committee had aligned with the CBN at its meeting that held almost a year ago, on August 26, 2019.
A non-performing loan in Nigeria is the sum of money borrowed in a loan contract in which the borrower has not made required repayments agreed to for at least 90 days. It stated that the MFBs must make provisions for credits such as general provision of two per cent of the outstanding balance of performing facilities or as may be advised by the CBN from time to time.
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