CBN Orders OFIs to Enroll in Credit Risk System by August 1

The Central Bank of Nigeria has said the enforcement of Section 3.1 (a) of the extant guidelines on  Credit Risk Management System (CRMS) that captures the “submit before disbursement” requirement shall henceforth apply to all Other Financial Institutions (OFls) as from August 1, 2022.

The apex bank said under the provisions of the regulatory guidelines for the redesigned CRMS for commercial, merchant, and non-interest banks issued on February 27, 2017, are now applicable to all OFIs in the country.

The central bank issued the directive in a circular distributed to OFIs, dated May 24, 2022, which was signed by its Director, Financial Policy and Regulation Department, Chibuzo Efobi.

Investors King recalls that the CBN had said it will extend its Credit Risk Management System to Other Financial Institutions (OFIs) operating in Nigeria to protect them from bad debtors.

The circular ordered OFIs to ensure customer compliance to the 10-digit Nigeria Uniform Bank Account Number (NUBAN) format, tagged with Bank Verification Number (BVN) or Tax Identification Number (TIN) for individual and non-individual accounts respectively of the account holder.

“The OFIs are requested to profile the information on the Nigeria Inter-Bank Settlement System Plc’s (NIBSS) Industry Customer Accounts Database (ICAD) not later than June 20, 2022,” the circular read in part. 

The CBN emphasised that the provision of these data is important to enrollment in the CRMS going forward and that the circular was further to various engagements with the OFIs with respect to deploying the credit risk requirement.

The CBN however, warned that failure by the OFIs to adhere to the stipulated timelines would attract appropriate sanctions. 

The CBN had in April 2021 given Microfinance Banks (MFBs), Development Finance Institutions (DFIs), Primary Mortgage Banks (PMBs), and Finance Companies (FCs) up to May 14, 2021, to also ensure full compliance with its CRMS rules. 

To ensure full compliance, the CBN had also advised the OFI operators to conclude the tagging of all live credit files of individuals and non-individual borrowers with BVN and TIN respectively by May 14, 2021.

The central bank pointed out that the move was part of efforts to promote a safe and sound financial system in Nigeria through the introduction of the CRMS to improve risk management in all financial institutions to prevent predatory borrowers from undermining the banking system.

“With the successful implementation of the CRMS in deposit money banks, it has now become expedient to commence the enrolment of OFIs on the CRMS platform,” the banking regulator added.