The Global Standing Instruction policy recently unveiled by the Central Bank of Nigeria (CBN) seems to be paying off as the regulatory body announced Tuesday that Nigerian banks recovered about N50.32m bad loans from debtors nine days after the kick-off of the policy.
This was disclosed by Kevin Amugo, CBN’s director, Financial Policy and Regulation during a webinar organised by the Chartered Institute of Bankers of Nigeria Dialogue Series 3.0 in Lagos.
The theme of the discussion is Non-Performing Loans and Global Standing Instruction Policy: Impact and Insights for Financial Stability.
The amount recovered was, however, insignificant compared with the total of N1.66 billion worth of bad debts by 26,057 customers triggered by the lending banks
The GSI policy was approved in February 18, 2020 but took effect from August 1, 2020 with three mail objectives:
- Facilitate an improved credit repayment culture
- Reduce non-performing loans in the Nigerian banking system; and
- Watch-list consistent loan defaulters
Mr Amugo said the CBN introduced the GSI as part of measures to curtail the rising non-performing loans (NPLs) in the Nigerian banks and its impacts on the industry.
“The size of the recovered NPLs was due to the fact that the CBN was still working on the GSI protocol for non-individual debtors, which means that the recovery was made from individual loan defaulters”, he said.
He said Non-Performing Loans ratio declined from 6.6 per cent in April 2020 to 6.4 per cent in June 2020; however, the figure still remains above the 6 per cent stipulated by the CBN.
“Also, credit to the economy grew by N3.46 trn, about 22 per cent, of which new credit in June 2020 alone accounted for N773 billion, up from N412.7 billion in May 2020. The number of new borrowers similarly rose by about 42,000 to 93,578 from 51,700 in May 2020”, he said.