To increase retail credit and curb the rising cases of non-repayment of such facilities, bank customers, who take loans but default in paying back, will henceforth lose their assets across the industry.

This is stipulated in a new clause introduced in the offer document announced by the Central Bank of Nigeria (CBN) yesterday.

Rising from the 345th Bankers’ Committee Meeting in Lagos yesterday, the CBN deputy governor for Financial Systems Stability, Aishah Ahmad, said that the clause is to give banks the confidence to increase retail lending.

She said that the loan-to-deposit (LDR) ratio directive which is expected to add N1 trillion in credit to the economy will see banks giving out more loans to applicants.

Ahmah added that to ensure that the loans do not lead to an increase in non-performing loans (NPLs), customers would have to fill in their Bank Verification Number along with a consent to a clause that their deposits in other financial institutions, be used to settle their debt in the event of any default.

According to her, “part of the reason that there is no credit is because of risk aversion. We do not want LDR directive to raise NPLs

“In taking loans, you agree to repay the loan and should you default, the total amount of deposit you have across the industry will be applied towards repaying the loans. This is to enable banks to lend with more confidence,” she said.

Also, CBN director, Banking Supervision Department, Ahmad Abdullahi, said that because of “the risk aversion in the industry and the need for the banks to increase their loan book to have an LDR of 60 per cent, a mechanism has been developed in the system whereby all new loans that are coming on board must have a BVN that will clearly identify them.

“Two, that there will be a clause whereby the borrower will have to sign an agreement that if for any reason there is a default of that particular loan, the bank has the right to set off with any deposit or any amount that the borrower will have in the industry,” he said.

Abdullahi disclosed that the Bankers’ Committee was also working with the credit scoring system in the industry “whereby all those that want to get a loan will have a credit score that will enable them have easy access to credit. That is another thing that will help improve credit in the industry.”

Also, the managing director and chief executive of Guaranty Trust Bank Plc, Segun Agbaje, said that there was need to grow retail and consumer lending in the economy, adding that “one of the things the CBN wants to do is pure consumer credit where individuals are able to get loans to buy cars, where supermarkets start to extend credit.”

He explained that the drive to increase credit particularly towards consumption and mortgage is to stimulate the economy and achieve Gross Domestic Product (GDP) growth, adding that “if you don’t lend to the small people, the retail people, then you are never going to help the economy. So, the CBN is encouraging different ways and hopefully we are transiting from pure retail loans to consumer-type credit.”

On his part, the managing director and chief executive of Access Bank Plc, Herbert Wigwe, hinted that the Bankers’ Committee is partnering with the Lagos State government on funding the creative sector.

He said that the partnership is “basically to develop the adjourning areas to the National Theatre and provide support for those four verticals, that is, fashion, Nollywood, music and of course, creation of an Information Technology (IT) hub.

“Preliminary work has started, we are working in earnest with the Lagos State government and hopefully we should be able to start something or break ground as soon as we can complete all the required formalities; so there is a huge push to support the creative sector as well,” he stated.

CBN Warns SMEs, Others On Fraudulent Loan Offers

Meanwhile, the CBN has warned small and medium scale enterprises and loan seekers against fraudulent loan offers circulating on social media circles requesting people to apply for loans provided by federal government through an e-mail address purportedly being handled by CBN.

In a disclaimer on the apex bank’s website, which was signed by the director, Corporate Communications, Mr. Isaac Okorafor, the CBN stated scammers using an e-mail addressempowermentcbnloan@gmail.com had been trying to defraud unsuspecting members of the public mostly youths and small business owners and loan seekers in the name of CBN.

He said that while the CBN, indeed, has several development finance intervention programmes from which different categories of businesses had benefitted (and still benefit), the bank does not do so through direct interaction with prospective applicants.

Okorafor said: “For the avoidance of doubt, there are clearly spelt out procedures for accessing CBN intervention funds, which are disbursed through Participating Financial Institutions (PFIs) such as Deposit Money Banks (DMBs), Development Finance Institutions (DFIs) and Microfinance Banks (MFBs).”

“Members of the public, particularly youths and owners of small-scale businesses are, therefore, advised to disregard any message requesting them to send their personal details, including mobile phone numbers, to emails such asempowermentcbnloan@gmail.com or any other one that may be contrived.

“These messages are fake and anyone who enters into correspondence with them does so at his or her own risk,” he said, directing prospective applicants to approach their respective banks or the CBN branch nearest to them for clarification on the procedure for accessing any of the apex bank’s-related loans. (LEADERSHIP)

Update news