fbpx
Connect with us

Hi, what are you looking for?

BUSINESS

From August 1, loan defaults will be settled using funds in other banks

Effective August 1, banks will be able to debit the accounts of loan holders in other banks to settle defaults.

This is according to global standing instruction (GSI) guidelines published by the Central Bank of Nigeria (CBN) on Monday.

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.

The apex bank said the directive would apply to eligible loans granted from August 28, 2019.

At its meeting that held on August 26, 2019, the bankers’ committee of the CBN agreed that loan defaults will be settled using customers’ deposits in other banks.

“The GSI shall serve as a last resort by a creditor bank, without recourse to the borrower, to recover past-due obligations (principal and accrued interest only, excluding any penal charges) from a defaulting borrower through a direct set-off from deposits/investments held in the borrower’s qualifying bank accounts with participating financial institutions,” the guideline document read.

A bank setoff happens when a financial institution removes money from a deposit account to cover a missed payment on a loan.

The apex bank listed the objectives of the GSI to include facilitating an improved credit repayment culture, reducing non-performing loans (NPLs) in the banking industry and watch-listing consistent loan defaulters.

Advertisement. Scroll to continue reading.

It warned banks not to use the GSI to recover penal charges that may have accrued on a credit/loan and included as part of outstanding balances/obligations of a borrower.

According to the guidelines, the account types that the standing instruction can be applied to include individual and joint savings accounts, current accounts, domiciliary accounts, investment/deposit accounts (naira and foreign currency), and electronic wallets.

Banks already have to get the credit history of customers before approving loans.

The CBN said banks must regularly report to the CBN on recoveries made through the GSI and releases made to other banks.

In the event of wrongful debit, the guideline provides that an erring bank would be made to take full liability and pay a flat fine of N500,000 per incident.

NewIssues Magazine
Written By

NewIssues Magazine is a monthly magazine based in Abuja, with a widely reach daily online news stories and analysis. We are ALWAYS in the HEART of NEWS

COVID-19 UPDATES

BUSINESS

The Presidential Task Force on COVID-19 has asked aviation authorities and airline operators to begin the process for the restart of international flights. With...

Advertisement

Facebook

Trending Today

Nigeria

By George Onmonya Daniel Members of the Islamic Movement in Nigeria, also known as the Shi’ites who have been protesting in Abuja to demand...

ANALYSIS

By Aliyu Maina Senator Kashim Shettima, Senator Abubakar Kyari, Senator Mohammed Ali Ndume are all senators from Borno state. I believe they are very...

NEWS

Major General Lamidi Adeosun, the Chief of Training and Operations of the Nigerian Army has been promoted to Lt. General. There is all indication...

POLITICS

IDespite condemnation from some Nigerians over the attack on Senator Ekwerenmadu in Germany where he went to attend a Yam festival, a lot of...

ANALYSIS

By George Onmonya Daniel  Late last year, to be precise, in December, NEWISSUES conducted a poll in which we asked people all over Northern...

featured

Most of us (bloggers) are non-professionals. That’s why organizations like CDD are training fact-checkers to tame the fake news merchants. Such a training is...

featured

US based Professor Farooq Kperogi has revealed that he got information that Buhari’s Special Adviser and son of his nephew, Sabiu “Tunde” Yusuf, has amassed...

NEWS

The man who was seen in a video who attempted to grab the president was shot, Daily Trust confirmed. Afterwards he was whisked to...

Nigeria

Mr. Eeben Barlow, South African military contractor, who’s company was sub-contracted to find the Chibok girls by the Goodluck Jonathan government, has told Aljazeera...

featured

Few weeks ago NEWISSUES Magazine did an analysis on the five worst governors in Northern Nigeria. Today we are going to look at the...

NEWS

There has been rumor of the president divorcing his wife and planning to marry an old flame since Aisha Buhari left Nigeria.  By George...

POLITICS

Senator Dino Melaye has declared his intention to run for the office of the governor of Kogi State. Mr. Dino Melaye told elders of...