New Telegraph

CBN amends GSI to boost banks’ loan recovery efforts

The Central Bank of Nigeria (CBN) has said that financial institutions in the country can now continue to use the Global Standing Instruction (GSI) for as long as they require the platform to recover loans from individuals who willfully fail to pay their debts. In a circular posted on its website yesterday, the apex bank announced 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.” The GSI policy for individuals, which came into effect on August 1 2020, was introduced by the CBN, to achieve objectives such as, facilitating improved credit repayment culture in the country; reducing Non-Performing Loans (NPLs), and promoting watch-listing of chronic loan defaulters in the banking system. Specifically, the policy provides that at the point of executing loan agreements, borrowers must also execute a GSI mandate in favour of the participating financial institution.

It further states that should a borrower default in paying a loan, the lending bank can activate the GSI, thus giving it the right to withdraw from the borrowers account held in any other bank in Nigeria. According to the policy, the lending bank can do this without any recourse to the borrower or giving any notice whatsoever.

Saturday Telegraph reports that in October last year, the CBN announced that the GSI policy would be expanded to corporate accounts and microfinance banks in the country. Mr. Adekunle Adeniji, the Assistant Director, Banking Supervision, CBN, who disclosed this, said that: “The GSI started with personal accounts but we are expanding to corporate accounts and microfinance banks. We understand that an individual can take a loan with commercial banks and choose not to fund his account and take his money to OFI.” “Microfinance banks are going to be part of the Global Standing Instruction (GSI) policy but that phase would come gradually,” he added.

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