By Chris Agabi




The Central Bank of Nigeria (CBN) has given approval to the banks to debit any defaulting debtor across all the banks where the debtor has funds.

The CBN also approved that the clause permitting the banks to apply this measure should be part of loan agreements to all customers.

This measure is one of the new mitigating conditions against the spate of Non Performing Loans (NPLS) as the CBN is pushing the banks to rev up lending to the real and other sectors of the economy. This new measure was disclosed yesterday at the end of the October 2019 bankers committee meeting.

Also recall the CBN recently reviewed the loan to deposit ratio to 60 percent which lapsed September 30th 2019. The CBN in another circular raised the LDR to 65 percent in the second phase of prepping banks lending and has given up to December 31st 2019 for all banks to comply.

At the end of the 60 percent phase of LDR implementation, the CBN debited 12 banks a total sum of N500bn for failure to meet up the threshold.

The N500bn debited will be kept in the vault of the CBN without any interest and the banks can’t invest the money until the CBN releases the money to them.

Briefing journalists at the end of the bankers committee meeting, Ahmed Abdullahi, the CBN Director, Banking Supervision said: “To encourage the banks to lend, the CBN has agreed that there will be a clause that an obligor will sign that will enable the bank net off against any amount he or she has in any other bank.”

Mr. Ebenezer Onyeagwu, the MD Zenith Bank, said LDR has helped to boost credit in the system. “It’s not a fine or sanction like has been reported. Yes the debit has taken place at a particular date, but that’s at the commencement point,” he explained.

Explaining further the decisions of the committee, Mubola Faloye, the Executive Director, Risk, Standard Chartered Bank said “one of things the committee reiterated is that there are some vulnerable sectors the committee will be lending to and it’s important that we mitigate our risks and have what we call a credit cross default clause that allows us to net off the obligations of defaulting party against any other money the defaulting party has in the industry.”

“That is a good support from the CBN for the banking community and it’s very important for us to include that clause in our loan agreement” she emphasized, adding that the CBN is supporting the banks to enforce that agreement when the need arises.

Read more: https://www.dailytrust.com.ng/cbn-grants-banks-approval-to-debit-loan-defaulters.html

Economy can't improve with Emefiele in charge as Governor of Central Bank. The man knows nothing like his oga at the top

This is very wrong.

Yes, its to fight NPL, but all loans should be collateralized at the same amount borrowed.
Hence, when there's a default, the collateral can be foreclosed. This is why we have legal mortgage

Things Fall Apart

- Chinua Achebe

Central Mafia Bank of Nigeria


It's another one from BuhariApC....!

Hmmm

Nawa oo

Which kain policy be this nau?

I always knew that this BVN stuff is anti-business. It is not to secure funds but to further impoverish the people. A link connecting multiple accounts together. It has always got me thinking

Now the Govt started with the 2% charge on bank transactions above 500 thousand. Then this, a broad daylight robbery!

So what if I default and the little cash in my other a account is what I am using to source for funds and upkeep. Then by the time the bank takes all the money left with me. Then the reason I obtained the loan is destroyed and the bank's interest is still there.

Is that not Instant and Quick One way to Bankruptcy

Modified: A lot of things is wrong with this country. But then if you cant help alleviate the problems. Then why add to it? Toks cars are gradually becoming unaffordable for the average earner thanks to the closing of borders and imposition of taxes. New cars are dreams, only politicians, super rich and companies can afford it. Now Entrepreneurs cant find solace in bank loans, because with this loan condition The Business is Failed Ab initio (from the beginning)

We need a loan so bad for our tech startup.
We already created our web and App.

Pls I will appreciate to work with anyone. Or any info about getting a start up loan from banks or Angel investors.
Thanks.

G

Good one, second to comment, one day I shall be the first to comment. very happy

Wait. It seems many members of this forum are uneducated or just lack common sense. Sometimes a lot of comments just doesn't add up to what a post is about and its usually based on condemning anything they read. I think the owner of the site and the moderators should do a better job to screen comments that are always based on unnecessary ranting.

Is there any form of development that can happen without a change in certain policies or ways of doing things. If we all stick to that particular way of life we are used to and still complain about it, then there is a change to such policy to bring development and we still complain then we the masses have a big problem being that we hardly spend time to think about the positive aspect of any new development but quickly rush to exhibit our ignorance by condemning it.

If we continue in this matter and line of thinking then I will be forced to say that we all deserve an iron hand government like this government of PMB who pushes whatever they deem fit to bring a positive development without having to listen to what the masses say because the masses say a lot of trash sometimes out of ignorance.

I see

This is not in the interest of the populace.

These people are really encouraging Nigerians to stop banking

Chai

Very good decision... How can you be owing Bank A and decide to do business with Bank B and later borrow from them to continue the cycle.

I blame the banks to some extent, They feel these Rich men are more credit worthy than SME's who need these loans to survive.

I borrowed from palm credit I have not paid ooh, hope they will not touch my life saving

Nice decision, no leave no transfer .

Good

Thumbs up for CBN, Alot of loan defaulter who has money in others bank gbege don dey ..Thumbs up for CBN

So bank will be deducting defaulters money like a doctor removing pregnancy abi.



Am not part of the defaulter, so the defaultee and the defaulter should there solve problems.



CBN I hail o

hisexcellency34:
Economy can't improve with Emefiele in charge as Governor of Central Bank. The man knows nothing like his oga at the top

Try to remove him from office and see another wave of secessionists agitation by our fellow compatriots from the SE, hinging it on marginalization, lopsidedness in appointments, victimization of a certain tribe and its people etc
Meanwhile...
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Virus99:
We need a loan so bad for our tech startup.
We already created our web and App.

Pls I will appreciate to work with anyone. Or any info about getting a start up loan from banks or Angel investors.
Thanks.

What's your tech/focusing on?

A good one from the CBN. I passionately believe that an average Nigerian is a corrupt individual regardless of his or her status.

Most of these customers come to Bank A to seek credit advances and loans; Bank A agrees and approve the credit facility. They will then move both the loan and their savings to Bank B and neglect Bank A thereby increasing Bank A's NPL's.

Now, no such thing; with the aid of BVN and NIBSS they must repay their loans regardless of the bank they put their monies in 9ja. No more audio money......

I thought these loans comes with collateral?

Or are the banks issuing loans without collateral?

The CBN also approved that the clause permitting the banks to apply this measure should be part of loan agreements to all customers.

Good measure but with the above clause, the the current defaulters won't be affected . Our banks needs more legal strength to enable them give loan easily, cos most banks are afriad of bad loans

I dont know why someone would have issue with this.
This is a good development.

OLisaMacaulay:
I borrowed from palm credit I have not paid ooh, hope they will not touch my life saving

Na people like you dem dey find....

Virus99:
We need a loan so bad for our tech startup.
We already created our web and App.

Pls I will appreciate to work with anyone. Or any info about getting a start up loan from banks or Angel investors.
Thanks.

Where is your location?

Gud one but trust Nigerians... Dem go still fine way to hide their cheese...

davodyguy:
This is very wrong.

Yes, its to fight NPL, but all loans should be collateralized at the same amount borrowed.
Hence, when there's a default, the collateral can be foreclosed. This is why we have legal mortgage

I don’t entire agree with you.

Liquidating collaterals can be difficult, it is a long and tiring process and most times the banks don’t get value for it.

This is a good way to go. Why be indebted to a bank and have enough money to pay such loan in a different bank?

This initiative will eventually drive down interest rates, the banks will lend more.

And business/sme pple will take loan repayment more serious.