Macroeconomic Report & Economic Updates

Nigeria Economic Update (Issue 5)

The CBN, in a recent circular to all banks and other financial institutions communicated an amendment to the Global Standing Instruction (GSI).3 The initial GSI which was introduced in July 2020 was a strategy to enable deposit money banks to recover outstanding debts from their customers who borrow money from it and default. The GSI was designed with the following specific objectives: (i) facilitate an improved credit repayment culture; (ii) reduce Non-Performing Loans in the Nigerian banking system; and (iii) watch-list consistent loan defaulters. In the amended GSI, the frequency of recovery attempts through the GSI platform was changed from “a specific number” to “continuous and unrestricted”. As a result of the amendment, the GSI loan recovery feature applicable to all loans in the banking industry shall remain perpetually in place throughout the life of the loan and/or until the loan is fully paid. The CBN needs to mandate all operating deposit money banks to educate their customers on the implications of the amendment before awarding new loans. The effective enforcement of the amended GSI is expected to enhance loan recovery rate among the deposit money banks and strengthen the health of the Nigerian banking industry

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