The Deposit Money Banks have commenced the process of recovering debts owed by chronic debtors from their accounts in other banks to curtail the growth of non-performing loans in the industry, Checkout Magazine learnt.
According to data obtained from the Central Bank of Nigeria and the National Bureau of Statistics, the NPLs in the banks recorded a slight decline from N1.2tn at the end of second quarter of 2020 to N1.1tn at the end of July 2021.
This is despite an increase in the gross loans in the industry in the period. The CBN said the measures it introduced such as the Global Standing Instruction to reduce banking sector risks was helping to reduce the NPLs in the sector.
According to the CBN, the GSI, which commenced on August 1, 2020, allows banks to recover the outstanding principal and interest upon default from any account maintained by the debtor across all financial institutions in Nigeria.
The CBN said in the latest Monetary Policy Committee report that it would not raise the lending rates in the sector.
“On loosening, the committee felt that this would lower retail interest rates and improve the ability of obligors to repay their obligations, with a complementary reduction in NPLs,” it said.
CBN added that for the banking industry, “Recent data also show that stability has been maintained and a smooth functioning of financial intermediation ensured.
“CBN staff report indicates that the banking sector’s non-performing loan ratio has fallen from 6.3 per cent in February to 6.0 per cent in March and further to 5.9 per cent in April.”
