Banks to seize defaulter’s funds in other banks
According to the apex bank, the GIS guideline was issued to
enhance loan recovery in the banking sector and to facilitate an improved
credit repayment culture; reduce Non-Performing Loans in the banking industry;
and watch-list consistent loan defaulters.
Accounts eligible for such seizure include individual
savings accounts, current accounts, domiciliary accounts, investment /deposit
accounts in both Naira, foreign currencies; as well as electronic wallets and
joint accounts.
The statement read in parts;
“The GIS shall serve as the 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 deposit/investments held in the borrower’s
qualifying bank accounts with participating bank accounts.”
While the Nigeria Inter-Bank Settlement System (NIBSS) and
the apex bank would be expected to work together for successful implementation
of the guidelines, it is expected that all banks must execute the GSI Mandate
Agreement with the NIBSS and ensure that all qualifying accounts remain visible
to NIBSS on the Industry Customer Accounts datab
Accounts of borrowers must be linked to their Bank’s
Verification Number (BVN), as failure to do so would attract such accounts
being watch-listed when discovered. It is also expected that all banks will
honour all balance inquiry and debit advice received from NIBSS for GSI Trigger
in accordance with master agreement including GSI recall instructions.
Chief Executive Officers of banks have been directed to
routinely update the Board of directors on the GSI process as it relates to
frequency of use and amounts recovered or released, and banks have also been
ordered to report regularly to the CBN on recoveries made through the GSI as
well as releases made to other banks.
Any creditor that violates the guidelines would be made to take full liability and pay a flat fine of N500m per incident.
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