Nigerian bankers have agreed that henceforth, loan defaulters will have to forfeit their assets in other bank accounts.
The forfeited funds will be used to service loans that have been defaulted on.
Aishah Ahmed the CBN’s deputy governor, financial services system, said this new directive will aid the reduction of credit aversion by the banks, and help banks that are yet to meet up with the required Loans to Deposit Ratio (LDR) of 60 percent by September 30.
Furthermore the directive will boost consumer credit, by making funds available to other honest loaners and in turn improve purchasing power to stimulate economic growth, she explained.
Ahmad while speaking with journalists after the bankers committee meeting held on Monday, also said new offer letters will require the bank verification number (BVN) of the customers.
She said such customer will be made to sign a new clause that states: funds in accounts with other financial institutions be used to service loans if default occurs.
By implementing this initiative, credit growth of N1 trillion is projected to be added to the industry, Ahmad said.
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 is 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 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.
Ahmed Abdullahi, director of banking supervision explained that individuals will now be able to obtain credit scores, and the scores will help banks to rate obligors.
“If you are not credit worthy, you will not be able to access loans,” he said.