Banking

CBN’s GSI policy ‘ll reduce non-performing loans – Financial Experts

Published

on

Some financial experts have lauded the Global Standing Instruction (GSI) policy of the Central Bank of Nigeria (CBN), saying it will reduce the non-performing loans already on the increase in Nigeria.

The experts expressed the views in separate interviews with the News Agency of Nigeria on Friday in Ibadan.

Mrs Lolade Adesola, a Financial Consultant at L. A. Consult, Ibadan, described the GSI as a very welcomed policy by the apex bank because of borrowers with fraudulent intentions.

“We know of borrowers who have money in one place and deliberately refuse to pay, just because the law says if money is in one name, another name cannot be used for repayment.

“But with this GSI, they will be able to take money from other accounts in any bank in Nigeria to pay any debt being owed by such a person.

“This is applicable, as we have an increased number of people who take loans, put the money in other banks and are then running their business,” she said.

Adesola said that this was what many people used to do while she was in the banking sector.

“People will get loans in one bank and refuse to pay back, and instead of paying money into their accounts that are in debt, they will go and open accounts other banks and be running them very well.

“So we are glad that a policy like the GSI has been formulated to cater for this lapse in the banking sector,” she said.

Adesola noted that the family members’ accounts were included in the policy, because most people opened accounts in the name of their family members.

“Although the policy ought not to have included family members’ accounts, we have, however, seen cases where people use family members’ names to open accounts, but they are the ones who sign cheques.

“I have seen a person, who brought out a cheque in someone else’s name and signed it, and the signature was exactly the one we had on the mandate.

“So people do all sorts of things and I am glad that they are being prevented from continuing such practices.

“You will see the account name of a minor with as much as N10 million and you will know the money in the account does not really belong to such a minor.

“Such money can definitely be used for repayment under the GSI, if it can be reasonably proven,” Adesola said.

According to her, the policy will make people think again before getting loans and make banks more comfortable to lend money to genuine businesses.

Mr Sola Famakinwa, a financial analyst, said, “The GSI is the CBN’s guideline that gives power to banks to debit loans and accrued interests due from bank accounts of loan defaulters in Nigeria.”

He said that the policy, which becomes effective from Aug. 1, had its merits and demerits.

The merit, according to him, includes the reduction of performance loans, which will also encourage loan repayment as and when due.

He, however, noted that its disadvantage could make bank customers to seek alternative means to credit facilities from private equity firms.

“Customers can seek credit facilities from the private financial institutions and turn down bank loans, and this can affect banks in the long-run,” Famakinwa noted.

Other pundits, who also spoke with NAN, believed that there must be strict adherence to the new policy, to prevent insider abuse whereby bank officials would lend to their cronies or undisclosed third parties, who were their relations.

Edited By: Folorunso Poroye and (NAN)‘Wale Sadeeq

Emiola Ibukun

Emiola Ibukun: NNN is a Nigerian online news portal that publishes breaking news in Nigeria, and across the world. Our journalists are honest, fair, accurate, thorough and courageous in gathering, reporting and interpreting news in the best interest of the public, because truth is the cornerstone of journalism and they strive diligently to ascertain the truth in every news report. Contact: editor[at]nnn.ng. Disclaimer.

Customers demand greater digital engagement from Communication Service Providers (CSPs) Coronavirus – Zimbabwe: COVID-19 update (19 January 2021) Coronavirus – South Africa: COVID-19 update (19 January 2021) Coronavirus – Eswatini: COVID-19 update (19 January 2021) Coronavirus: African Union Member States reporting COVID-19 cases as of 19 January 2021, 6 pm EAT Coronavirus – Nigeria: COVID-19 update (19 January 2021) UNHCR finds dire need in Eritrean refugee camps cut off in Tigray conflict Coronavirus – Africa: COVID-19 update (19 January 2021) Coronavirus – Ethiopia: COVID-19 update (19 January 2021) East African countries better prepared, but desert locust threat ‘not over’ African messaging app ayoba assures users of full privacy and security protection, safe for younger users The END Fund welcomes Moses Bockarie and Carol Karutu as board member and Head of Programs Here’s what happened on the last day of NEF-GG 2020 Reach Africa’s 1.35-billion consumers with content in the region’s most widely spoken local languages, says Pronto Translations Pakistan approves China’s Sinopharm COVID-19 vaccine for emergency use Dinosaur Adventure Drive-Thru event held in Kenner, United States Head of UN Conference on Trade and Development resigns Retail stores, hair salons reopen to public in Greece Security concerns put Washington D.C. on edge as Biden inauguration nears WHO pandemic review panel highlights effective multilateralism in COVID-19 response Brazil’s financial market forecasts 3.45 pct economic growth in 2021 Nigerian troops kill 30 bandits in gunfight Roundup: United States COVID-19 cases top 24 mln two days from new administration EU plans to start spending huge recovery fund in months Chile reports 3,918 new COVID-19 cases Tunisia reports 1,795 new COVID-19 cases, 181,885 in total Start of 2021 sees overall upward trend in COVID-19 situation: WHO official Cuba reports 292 new COVID-19 cases Brazil launches mass COVID-19 vaccination campaign Egyptian defense minister, Greek chief of staff discuss military ties Authorities investigate 12 murders in eastern Mexico Speaker Berri says Lebanon reels under unannounced sanctions, siege Roadway crash kills 12 in Ecuador France registers 403 COVID-19 deaths in 24 hours Roundup: Stellantis starts off strongly, replacing Fiat, Peugeot on stock exchanges Tunisia arrests 632 individuals following looting, vandalism Chinese envoy calls for strengthened UN-Arab League cooperation Roundup: Lockdown raises Israeli unemployment rate to 15.9 pct; Iran records 5,806 new COVID-19 cases, 1,336,217 in total Lebanon registers 3,144 new COVID-19 cases, 255,956 in total Morocco registers 473 new COVID-19 cases, 35 more deaths One dead after avalanche hits Russian ski resort Coronavirus – Sierra Leone: COVID-19 update (18 January 2021) UN chief appoints new envoy on Libya Coronavirus: African Union Member States reporting COVID-19 cases as of 18 January 2021, 9 am EAT 23 killed in clashes between Yemeni army, Houthis in Hodeidah 5.3-magnitude quake hits south of Kermadec Islands: USGS Egypt uncovers remains of Roman fort in Aswan WHO chief spells out 3 COVID-19 lessons German, Turkish ministers discuss better EU-Turkish ties as tensions ease in East Med NYC COVID-19 test positivity rate down to 8.29 pct, new cases 4,519: mayor