The Central Bank of Nigeria (CBN) has further strengthened the guidelines on the Global Standing Instructions (GSI) policy in a bid to curb the spate of bad loans in the Niigerian banking sector.
In a circular to all banks and financial institutions, signed by the Director, Financial Policy and Regulatory Department, Chibuzo Efobi, the apex bank said the initiative was conceived “to address recurring instances of willful loan default in the industry.”
According to Efobi, the GSI aims to “identify and watch-list recalcitrant loan defaulters; enhance loan recovery from all eligible and funded accounts/wallets in the industry; improve credit
repayment culture; and to reduce non-performing loans” in the banking sector.
“Consequently, please be informed that the frequency of recovery attempts via the GSI platform has been amended from specific number to continuous and unrestricted number,’’ he said.
He added: “The GSI automated loan recovery feature applicable to all loans in the industry shall remain perpetually in place throughout the life of the loan, or until it is fully repaid.”
The policy, introduced by the CBN under Section 2 (d) of the CBN Act, 2007, is to promote a sound financial system and enhance loan recovery across the Nigerian banking sector. It was approved by the Bankers’ Committee on February 18, 2020.
FULL TEXT OF THE STATEMENT:
CIRCULAR TO ALL BANKS AND OTHER FINANCIAL INSTITUTIONS
RE: GLOBAL STANDING INSTRUCTION (GSO – INDIVIDUALS
In furtherance of its mandate to promote financial system stability, the Central Bank of Nigeria (CBN) released the circular on Operational Guidelines on the Global Standing
Instruction (GSI) Individuals (dated July 13, 2020; Ref No: FPRD/DIR/GEN/CIR/07/056).
The initiative was conceived to fundamentally address the recurring instances of willful loan default in the industry in order to:
• identify and watch-list recalcitrant loan defaulters; enhance loan recovery from all eligible and funded accounts/wallets in the industry; improve credit repayment culture; and o reduce non-performing loans in the Nigerian banking system.
Consequently, please be informed that the frequency of recovery attempts via the GSI platform has been amended from a specific number to continuous and unrestricted.
In other words, the GSI automated loan recovery feature applicable to all loans in the industry shall remain perpetually in place throughout the life of the loan and/or until the loan is fully repaid.
Please be guided accordingly and review the Guidelines, which remains available on the CBN website: www.cbn.gov.ng