The Central Bank of Nigeria on Monday released the guidelines aimed at reducing non-performing loans in the banking sector and monitoring chronic loan defaulters.
The CBN released the guidelines through a circular to all banks and other financial institutions, with the title ‘Operational guidelines on global standing instruction – Individuals.
The circular, which was signed by the Director, Financial Policy and Regulation Department, CBN, said, “The Bankers’ Committee, at its meeting on February 18, 2020, approved the go-live on the Global Standing Instruction, which aimed at facilitating an improved credit repayment culture; reducing non-performing loans in the Nigerian banking system; and watch-listing consistent loan defaulters.”
The apex bank said it collaborated with stakeholders to develop necessary protocols to facilitate a seamless implementation of the GSI process, including eligible loans granted from August 28, 2019.
It stated that the guidelines would take effect from August 1, 2020.
Under the guidelines, creditor bank would ensure that borrowers were properly educated about the GSI mandate and its implications, and enshrine same in their loan application process.
The banks would review and validate the GSI mandate instrument prior to loan disbursement.
It added that they would indemnify the Nigeria Inter-Bank Settlement System and other participating financial institutions from all liabilities that may arise from inappropriate use of the GSI infrastructure.
The CBN stated that the banks would retain copies of physical or digital version of the executed GSI mandate and provide same when required.
The CBN added that the participating financial institutions must execute the GSI mandate agreement with NIBSS.
They must also ensure all qualifying accounts were properly maintained and visible to NIBSS on the industry customer accounts database or by any other service created or provisioned for this purpose.
The guidelines stated that they must “ensure that accounts in NIBSS’ ICAD are correctly tagged with correct Bank Verification Number, and ensure and maintain connectivity to the Nigeria Central Switch.”
The CBN added that they must ‘honour all balance