CBN’s GSI policy ‘ll reduce non-performing loans – Financial Experts

CBN Headquarters

 Some financial experts have lauded the Global Standing Instruction (GSI) policy of the Central Bank of (CBN), saying it will reduce the non-performing loans already on the increase in .
The experts expressed the views in separate interviews with the News Agency of () on Friday in Ibadan.
Mrs Lolade Adesola, a Financial Consultant at L. A. Consult, Ibadan, described the GSI as a very welcomed policy by the apex bank because of borrowers with fraudulent intentions.
“We know of borrowers have money in one place and deliberately refuse to pay, just because the law says if money is in one name, another name cannot be used for repayment.
“But with this GSI, they will be able to take money from other accounts in any bank in to pay any being owed by such a person.
“This is applicable, as we have an increased number of people take loans, put the money in other banks and are then running their business,” she said.
Adesola said that this was what many people used to do while she was in the banking sector.
“People will get loans in one bank and refuse to pay back, and instead of paying money into their accounts that are in , they will go and open accounts other banks and be running them very well.
“So we are glad that a policy like the GSI has been formulated to cater for this lapse in the banking sector,” she said.
Adesola noted that the family members’ accounts were included in the policy, because most people opened accounts in the name of their family members.
“Although the policy ought not to have included family members’ accounts, we have, however, seen cases where people use family members’ names to open accounts, but they are the ones sign cheques.
“I have seen a person, who brought out a cheque in someone else’s name and signed it, and the signature was exactly the one we had on the mandate.
“So people do all sorts of things and I am glad that they are being prevented from continuing such practices.
“You will see the account name of a minor with as much as N10 million and you will know the money in the account does not really belong to such a minor.
“Such money can definitely be used for repayment under the GSI, if it can be reasonably proven,” Adesola said.
According to her, the policy will make people think again before getting loans and make banks more comfortable to lend money to genuine businesses.
Mr Sola Famakinwa, a financial analyst, said, “The GSI is the CBN’s guideline that gives power to banks to debit loans and accrued interests due from bank accounts of loan defaulters in Nigeria.”
He said that the policy, which becomes effective from Aug. 1, had its merits and demerits.
The merit, according to him, includes the reduction of performance loans, which will also encourage loan repayment as and when due.
He, however, noted that its disadvantage could make bank customers to seek alternative means to credit facilities from private equity firms.
“Customers can seek credit facilities from the private financial institutions and turn down bank loans, and this can affect banks in the long-run,” Famakinwa noted.
Other pundits, who also spoke with , believed that there must be strict adherence to the new policy, to prevent insider abuse whereby bank officials would lend to their cronies or undisclosed third parties, who were their relations. 

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