In an effort to aid reduction of credit aversion by the banks, and help banks that are yet to meet the required Loans to Deposit Ratio (LDR) of 60 per cent by September 30, the Bankers’ Committee has agreed that, loan defaulters will have to forfeit their deposit assets in other bank accounts to settle their debts.
The Bankers’ Committee, an umbrella body of the Central Bank of Nigeria’s (CBN) officials and managing directors of deposit money banks (DMBs), on Monday, explained that the forfeited funds will be used to service loans that have been defaulted on.
Speaking to journlists at the post bankers committee briefing in Lagos, the CBN’s Deputy Governor, Financial Services System, Aisha Ahmed said this new directive will boost consumer credit, by making funds available to other honest loaners and in turn improve purchasing power to stimulate economic growth.
She, however, explained that the new offer letters will require the bank verification number (BVN) of the customers, while the customer will be made to sign a new clause that states: Funds in accounts with other financial institutions be used to service loans when default occurs.
She noted that by implementing this initiative, credit growth of N1 trillion is projected to be added to the industry.
On the drive to improve credit access to the creative industry, Herbert Wigwe, Chief Executive Officer, Access Bank said the bankers are collaborating with the Lagos State Government in a pilot agreement towards developing adjourning areas of the National Theatre.
He said the bankers’ agreement to support four key areas which are music, fashion, Nollywood and IT hubs are due to their significance on the economy and their ability to engage a lot of the Nigerian youths.
Nigerian Banks have recently succeeded in bringing down the ratio of industry non-performing loans (NPLs) to a single digit.
On whether the new directive won’t hamper progress already made with NPLs the bankers noted that adequate credit scoring will be implemented on would be obligors.