The Central Bank of Nigeria, CBN, has issued guidelines
on the Global Standing Instruction, GSI, which enables
banks to seize loan defaulters’ money in other banks.
The apex bank said the GIS guideline, obtained,
yesterday, was to enhance loan recovery in the banking
sector.


It said: “The GIS shall serve as the 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 deposit/
investments held in the borrower’s qualifying bank
accounts with participating bank accounts.”


The objectives of the GSI, CBN said, were to facilitate an
improved credit repayment culture; reduce Non-
Performing Loans in the banking industry; and watch-list
consistent loan defaulters.


Eligible accounts from GSI, it said, include individual
savings accounts, current accounts, domiciliary
accounts, investment /deposit accounts in both Naira
and foreign currencies; as well as electronic wallets.



The bank said joint accounts would also be subjected to
the GSI.



It said all banks, the Nigeria Inter-Bank Settlement
System (NIBSS) and the apex bank would be expected to
work together for successful implementation of the
guidelines.


CBN said that all accounts of borrowers must be linked
to their Bank’s Verification Number, BVN, adding that
failure to do so would attract such accounts being
watch-listed when discovered.


According to the guidelines, all banks must execute the
GSI Mandate Agreement with the NIBSS and ensure that
all qualifying accounts remain visible to NIBSS on the
Industry Customer Accounts database or by any other
service created or provisioned for this purpose.


Each bank must honour all balance inquiry and debit
advice received from NIBSS for GSI Trigger in
accordance with master agreement including GSI recall
instructions.


The guideline makes it mandatory for each bank chief
executive officer “to routinely update the Board of
directors on the GSI process as it relates to frequency of
use and amounts recovered or rell as,
releases made to other banks.
A violation of the guidelines, when a creditor bank
activates GSI mandate in error, especially when it is
inconsistent with prudential guidelines, that creine of
N500m per incident.

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The bank said joint accounts would also be subjected to the GSI.

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