UPDATED: Nigerian banks recover N50.32m bad loans in 9 days with CBN's new guideline

Nigerian banks have within nine days of implementing the Global Standard Instruction (GSI) recovered N50.32 million bad loans from individual borrowers.

Kevin Amugo, Central Bank of Nigeria’s director of financial policy and regulation, disclosed this on Tuesday at the Chartered Institute of Bankers of Nigeria (CIBN) advocacy dialogue on ‘Non-Performing Loans (NPL) and GSI policy: Impact and insight for financial stability’ held in Lagos via Zoom.

The CBN had on July 13, 2020 issued a guideline on Global Standing Instruction (GSI) to enhance loan recovery across the banking sector, effective from August 1, 2020.

Industry summary of the GSI as disclosed by Amugo showed that banks so far triggered a total of 26,057 bad debts with a total value of N1.67 billion between August 1 and 9, 2020.

The CBN is currently working on the protocols for GSI for non-individuals and would soon release its operational guidelines.

Amugo also disclosed that the CBN has commenced the onboarding of mobile money operators unto the GSI platform.

The regulator said it has commenced onboarding of other financial institutions (OFIs) onto the Credit Risk Management System (CRMS) and thereafter to GSI platform.

Other financial institutions include microfinance banks, primary mortgage banks, development finance institutions and finance companies.

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Adesola Adeduntan, managing director/CEO, First Bank of Nigeria, said for the banks to have recovered N50.3 million within a space of nine days is a positive development with high prospects.

Adeduntan, who was represented by Olusegun Alebiosu, chief risk officer at First Bank of Nigeria, said the number of recoveries was bound to increase in one year.

He said banks are supposed to support customers access cheap funds by way of guarantees but the problem has been trust.

“If the economy is to move ahead, trust environment must be improved,” Adeduntan said during a panel session.

At its meeting on February 18, 2020, the Bankers Committee approved the go-live on the GSI. The objectives of GSI include to facilitate an improved credit repayment culture, reduce non-performing loans (NPLs) in the banking industry, and watch-listing consistent loan defaulters.

The Nigerian banking sector non-performing loans ratio improved marginally to 6.4 percent in June 2020, from 6.6 percent in April 2020, though higher than the 5 percent regulatory threshold.

Godwin Emefiele, governor of the CBN, noted at the last Monetary Policy Committee (MPC) meeting that aggregate domestic credit (net) grew by 5.16 percent in June 2020 compared with 7.47 percent in May 2020. The committee commended the CBN Loan-to-Deposit Ratio (LDR) initiative to address the credit conundrum as the total gross credit increased by N3.33 trillion from N15.56 trillion at end-May 2019 to N18.90 trillion at end-June 2020. These credits were largely recorded in manufacturing, consumer credit, general commerce, information and communication, and agriculture, which are productive sectors of the economy.

Hope Moses-Ashike

Hope Moses-Ashike is an Associate Editor, Banking and Finance, with more than a decade of experience reporting on Nigeria’s financial system and broader economy. She closely tracks market movements, monetary policy decisions, company disclosures, regulatory actions, economic indicators, and global developments, and interprets what they mean for businesses, investors, policymakers, and households. Her reporting helps readers understand complex issues such as inflation trends, foreign exchange market dynamics, interest rate decisions, bank performance, and investment risks. She also covers major international events and periodically travels to Washington, D.C., to report on the World Bank/IMF Spring and Annual Meetings. Her dedication to financial journalism has earned her multiple recognitions and invitations to high-level professional development programmes. She is an alumna of the International Visitors Leadership Programme (IVLP) in the United States and holds an Advanced Financial Journalism Certificate from the Press Association Training in London, UK. Her other notable achievements include completing the Lagos Business School CMC Programme, the Bloomberg Media Africa Initiative Programme, and a Master Class in Journalism at Rhodes University in South Africa.