BANKS are carrying a heavy load of Non-Performing Loans (NPLs), which rose 78 per cent year-on-year to N649.63 billion last May.
The “worrisome” trend should be tackled, Central Bank of Nigeria (CBN) Governor Godwin Emefiele said yesterday.
He was speaking at the third National
Credit Reporting Conference organised by the Credit Bureau Association
of Nigeria (CBAN) in Lagos.
To him, the state of bad loans in the
sector implies that efforts need to be doubled in credit information
sharing to stem this “worrisome” trend.
He said the apex bank had made it
mandatory for all financial institutions to have data exchange
agreements with at least two credit bureaux. “All banks are required to
obtain credit report from at least two credit bureaux before granting
any facility to their customers whilst quarterly portfolio checks must
also be carried out to enable them determine borrowers’ current exposure
to the financial system,” Emefiele said.
Emefiele, who was represented by the
Branch Controller at CBN Lagos Office, James Iyari, said the apex bank
had also approved the payment of one-off sign-on fees with credit
bureaux for all the microfinance banks and other micro financial
institutions licensed by the CBN.
This, he said, would support effective
use of the infrastructure provided by the private credit bureaux with a
view to deepening the subsector.
Emefiele warned that bank customers who
continuously issue dud cheques to their clients will have their cheque
booklets withdrawn by their banks, which have the right to withdraw them
from customers who record three defaults.
According to the CBN boss, since it is
difficult to prosecute serial dud cheque issuers, the right thing for
banks to do is withdraw the booklets form such offenders.
He said after the defaulting customer
records the third dud cheque issuance, it would have become clearer that
such a person is unfit to have cheque books and will have the booklets
withdrawn – in line with the provisions of the Dishonoured (Dud) Cheques
Act of 1977.
The names of the offenders are also to
be forwarded to the three private credit bureaux and the Credit Risk
Management System (CRMS). Except with the prior written approval of the
CBN, such names will not be removed from the CRMS.
Emefiele said: “There is a dud cheque
Act, and the CBN receives returns on dud cheques, which is passed to
credit bureaux. We want the credit bureaux at their own end to capture
those bank customers that consistently issue dud cheques. If you issue
dud cheques, you are a bad customer.”
He said the CBN will continue to supervise the credit bureau industry to ensure that the financial sector is robust and safer.
Speaking on the theme: “Credit bureau
and access to finance: Nigeria’s success story”, Emefiele said this year
marks the 25th year anniversary of credit reporting in the country. It
has no doubt contributed to the resilient financial system that is
propelling the growth of the nation, he added.
“The CBN is saddled with the
responsibility of ensuring the stability of financial system and has
been formulating policies aimed at achieving a sound and stable
financial system. In realisation of this objective, it has vigorously
pursued the development of the key financial infrastructure such as the
payments and credit reporting systems,” he said.
The CBN chief disclosed that the
National Assembly was considering a bill on National Credit Reporting
that will bring all stakeholders under one regulatory platform.
To make the proposed Bill meet
international standards, the CBN, in collaboration with the
International Finance Corporation and the CBAN, reviewed the draft Bill
and articulated some amendments to the document. “The recommended
amendments would be presented to the National Assembly during the public
hearing on the Bill for adoption into the Credit Reporting Bill,” he
said.
The three licensed private credit
bureaux have been performing their functions and this has complemented
the CBN’s CRMS in ensuring the effective management of credit risk
within the banking system.
CBAN Chairman Mrs. Jameelah
Sharrieff-Ayedun said the group will continuously project the use of
credit information as a viable tool for access to finance. She said
credit bureau remains critical in nation-building as it ensures that
only people with integrity get access to credit. Credit bureaux are key
in stimulating economic growth through the provision of critical risk
management and fraud prevention services to the financial services
sector, Mrs Sharrieff-Ayedun said.
The sector, she added, is making it possible for more people within the population to have access to credit.
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