CBN orders banks to publish lists of debtors from May 1

The Central Bank of Nigeria (CBN) has ordered banks to publish lists of individuals and companies with non-performing loans.

The regulatory bank said this is to curb a rise in bad debt as the industry stumbles amid low oil prices.

The development is causing palpable tension in the banking industry, DAILY POST has learnt.

A mid-level staff in one of the banks told our correspondent that since word of the directive leaked and eventual announcement, a number of companies and individuals have reached out to his bank’s management.

“They are pleading that we cover their shame. But I think many banks will publish more than 80 percent of defaulters especially the ones who are constant debtors,” he said.

Tokunbo Martins, director of banking supervision, in a circular posted on the CBN website lamented “the rising trend of non-performing loans,”

The statement said the new rule, effective from May 1, is to “ensure that the industry NPL ratio does not exceed the prudential limit of 5 per cent, and to improve the credit culture in the banking industry.”

Banks are expected to publish a list of debtors that fail to meet the deadline in at least three national newspapers each quarter.

Delinquent borrowers will get three months to start repayment, while borrowers whose loans remain non-performing after that period will be banned from Nigeria’s foreign-exchange and government bond markets.

Below is full text of circular

LETTER TO ALL BANKS AND DISCOUNT HOUSES
RECOVERY OF DELINQUENT CREDIT FACILITIES

The Central Bank of Nigeria has observed the rising trend of non-performing loans (NPL) in the industry.

In order to ensure that the industry NPL ratio does not exceed the prudential limit of 5%, and to improve the credit culture in the banking industry, banks and discount houses are directed to observe prudent credit underwriting and monitoring standards.

Furthermore, banks and discount houses are required with effect from May 1st 2015 to:

i. Give the delinquent debtors three months of grace to turn their accounts from non-performing to performing status.

ii. Publish the list of delinquent debtors that remain non-performing in at least three national daily newspapers quarterly (The delinquent debtors are those whose accounts have been classified lost and include the persons, entities, directors, subsidiaries and other related parties). The list must be sent to the CBN as soon as the publication is made.

Banks and Discount houses are also to note that delinquent debtors in the category described above will be blacklisted by the CBN and are therefore:

i. Banned from participating in the Nigerian foreign exchange market.

ii. Banned from participating in the Nigeria Government securities market.

Please be guided accordingly.

‘TOKUNBO MARTINS (MRS.)
DIRECTOR OF BANKING SUPERVISION

One Comment

1. 

   Proud Yoruba

   April 25, 2015 at 10:31 pm

   Why publish names? Will that help to get the money back? Isn’t that a violation of privacy? Why not go after their assets used to collaterize the loan and get your money? Why does everybody whine and feel powerless? You can sue them and get a judgment and garnish their wages, impound their cars, seize their assets, so many options.