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CBN, Banks to Build Database of Loan Defaulters

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  • CBN, Banks to Build Database of Loan Defaulters

In an effort to identify loan defaulters and reduce the size of bad debts in the banking sector, the Central Bank of Nigeria and Deposit Money Banks have started building a credit history of borrowers to identify bad debtors and barred them from accessing loan facility in other commercial banks.

According to the CBN, the records of debtors and their credit history would be available to all financial institutions and allow them to make an informed decision regarding a potential borrower.

This, the apex bank said will prevent bad debtors from accessing loan facility in other banks without resolving issues with their previous banks.

Mr Isaac Okorafor, the Director, Communications Department, disclosed this during a sensitisation programme for stakeholders in the sector in Lagos.

He said, “We are building credit record for loan borrowers. If you don’t repay the loans you have collected, you will not be able to borrow from any Nigerian bank again.”

Okorafor also stated that a lot of manufacturing companies that were previously supporting the labour market had turned to warehouses for imported goods.

Therefore, to reverse this ugly trend, he said, “We decided that we must fund local producers to produce locally. That is why we started the Anchor Borrowers scheme.

“We ensured the real borrowers were farmers and we used the Bank Verification Number to identify them. The loans we gave them were not entirely cash, but also inputs and best seedlings that they may not be able to get on their own.”

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.