The Central Bank of Nigeria (CBN) in pursuant of its mandate to promote a sound financial system in Nigeria and in collaboration with stakeholders has developed and released the protocols for the implementation of Global Standing Instruction (GSI) for individual borrowers in Nigeria.
The Banker’s Committee at its meeting of February 18 2020 had approved the go-live of the GSI which has the objective to Facilitate an improved credit repayment culture; Reduce Non-Performing Loans (NPLs) in the banking industry and Watch-listing consistent loan defaulters.
According to the CBN guidelines released today, “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 guidelines which state that only the outstanding loan principals and accrued interests can be recouped by creditor bank against debtors accounts in other banks also listed account types that can be debited in other banks to include: Individual Savings Accounts; Individual Current Accounts; Individual Domiciliary Accounts; Investment/Deposit Accounts (Naira & Foreign Currency); and Electronic Wallets. The list also includes joint accounts. Part of the responsibility of the borrowers however, is to ensure all his/her account in all banks are linked to the BVN otherwise such customers will be blacklisted if discovered.
The guidelines which are expected to be implemented by all banks and Financial institution in Nigeria effective August 1, 2020, will affect all loans granted to individual customers from August 28, 2019. You can access the full guidelines here