TROUBLESOME DAYS AHEAD FOR ABP DEBTORS AS CBN ACTIVATES AUTOMATIC DEBIT ORDERS ON DEBTORS ACCOUNTS IN COMMERCIAL BANKS

The Central Bank of Nigeria has mandated commercial and merchant banks to begin debiting various loan defaulters

Specifically, the bank asked the financial institutions to debit the accounts of debtors of the Anchor Borrowers Programme 

CBN activated the Global Standing Instruction (GSI) to comb bank accounts of loan defaulters using their BVNs

The Governor of the Central Bank of Nigeria (CBN), Olayemi Cardoso, revealed that over N10 trillion has been loaned to customers under various intervention schemes. 

CBN data reveals that between September and October 2022, the apex bank disbursed about N41.02 billion to several agricultural projects under the Anchor Borrowers’ Programme (ABP). 

The total disbursement under the ABP scheme amounts to N1.07 trillion to about 4.6 million smallholder farmers growing 21 commodities nationwide. 

CBN also disbursed N300 million to fund large-scale agricultural projects under the Commercial Credit (CACs), amounting to N745.31 billion paid under the scheme. 

The bank released N48.30 billion under the N1 trillion Real Sector Facility to seven new real sector initiatives in agriculture, manufacturing, and services, bringing the total disbursement under the facility to N2.15 trillion to 437 projects in Nigeria. 

The Nation reports that beneficiaries of the 100 for 1oo on production and productivity scheme received about N20.78 billion under various sectors spanning healthcare, manufacturing, and services, amounting to N114.17 billion disbursed to approximately 71 projects across Nigeria. 

The apex bank also disbursed N4 billion under the Intervention Facility for Natural Gas Expansion Programme to boost the adoption of compressed natural gas for transport and liquified petroleum gas for cooking. 

 

The CBN has adjusted the Global Standing Instruction (GSI), a policy allowing financial institutions to debit bank accounts of loan defaulters to settle debts. 

CBN mandates banks to begin automatic debit of chronic debtors 

According to a circular titled ‘Re: Global Standing Instruction (GSI), Individuals’, CBN said the rate of recovery attempts through the GSI platform will continue unrestricted. The circular said: “Consequently, please be informed that the frequency of recovery attempts via the GSI platform has been amended from a specific number to continuous and unrestricted.” 

“In other words, the GSI automated loan recovery feature applicable to all loans in the industry will henceforth remain perpetually in place throughout the life of the loan and until the loan is fully repaid.” 

The financial institution regulator said it conceived the initiative to address wilful loan default in the banking industry, watch list chronic loan defaulters, boost recovery from eligible and funded accounts in the sector and improve credit repayment culture. 

The policy became effective in August 2020 as part of efforts to reduce the rate of non-performing loans in the banking sector.

Experts believe the GSI implementation has led to the banks expanding their loan base since they have CBN’s backing and GSI to recover their funds. 

CBN stated that the exercise requires borrowers to agree to a GSI mandate in hard copy or digital form, after which eligible accounts are linked to the borrower’s Bank Verification Number (BVN). 

The apex bank added that the GSI form authorizes the recovery of an amount stated by the bank from any/all accounts maintained by banks and other financial institutions to debit accounts of recalcitrant loan defaulters in any bank in Nigeria to alleviate the growth of non-performing loans. 

The development comes as the deadline given to security agencies by President Bola Tinubu to recover all loans under the Anchor Borrowers’ Programme elapsed. 

Tinubu reportedly summoned top security agencies and urged them to take all necessary action to recover the vast amount. 

According to the report, CBN’s subsidiary and a commercial bank in Nigeria, which acted as mediators, allegedly diverted about N255 million, which they secured from CBN but refused to disburse or return to the apex bank. 

Some beneficiaries refused to repay the loan, claiming they did not make substantial returns on their investments and asked for more time to repay. 

The (CBN), in partnership with NIRSAL Microfinance (NMfB), has commenced recovery of loans from defaulting Nigerians. CBN investigator probes bank CEOs over Anchor Borrowers Programme, other schemes Legit.ng reported that Bank CEOs and top officials of banks in Nigeria may be investigated during the ongoing investigation into the affairs of the Central Bank of Nigeria (CBN) under Governor Godwin Emefiele.

 Punch report says the CEOs would be invited to ascertain any abnormalities around the handling of intervention funds by the commercial banks. According to the report, the apex bank may be asked to withdraw its recently published financial statements.