CBN Seeks Endless Loan Recovery as it Amends Operational Guidelines

The Central Bank of Nigeria (CBN) has modified its operational guidelines of the Global Standing Instruction (GSI) with the aim of continuous and seamless loan recovery by Deposit Money Banks as well as other financial entities across the country.

The apex bank revealed this via a circular “Global Standing Instruction (GSI) – Individuals,’  January 19, 2022, approved by CBN Director, Policy and Regulations, Chibuzo Efobi addressed to all financial institutions in Nigeria.

Global Standing Instruction creates a contractual mandate from an individual borrower, in favour of a creditor bank to apply monies standing to the credit of the borrower in a third-party financial institution or electronic wallet to offset the debt obligations of the borrower.

The CBN explained  that in effect, the GSI’s 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 guideline contains lists of sanctions to be meted on banks and financial institutions in the event of violation or misapplication of the GSI.

The circular reads in part, “In furtherance of its mandate to promote financial system stability, the CBN released the circular on the operational guidelines of the Global Standing Instruction (GSI) – Individual dated July 13, 2020.”

The apex bank stated further that the move was in furtherance of its mandate to promote financial system stability.

The Financial  initiative was primarily conceived to address the recurring instances of willful loan default in the industry with a view to identifying and watch-listing recalcitrant debtors, improving loan recovery from all eligible and funded accounts/wallets in the banking sector, improving credit repayment culture and reducing Non-Performing Loans (NPLs) in the Nigerian banking system.