Home Business Banks begin deduction of loans from chronic debtors’ accounts

Banks begin deduction of loans from chronic debtors’ accounts

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Banks begin deduction of loans from chronic debtors’ accounts

The Deposit Money Banks are recovering debts owed by chronic debtors from their accounts in other banks to curb the growth of non-performing loans in the industry, findings have revealed.

Figures obtained from the Central Bank of Nigeria and the National Bureau of Statistics showed that 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.

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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.

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It said the slight improvement reflected the strengthening of risk management practices, the GSI policy and regulatory forbearance that had allowed banks to restructure credits impacted by the COVID-19 pandemic.

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