“If you don’t pay the loans you collected from a bank, we will use your deposits in other banks to service your loans.”
This is coming from the Managing Director of Guaranty Trust Bank, Mr Segun Agbaje.
He said this is Lagos on Monday during a stakeholders meeting on sanitizing and elevating the financial market.
It was the 35th Bankers Committee Meeting.
But Agbaje is not just speaking for his bank.
He more or less spoke on behalf of all banks as many of them were part of the programme with the Central Bank of Nigeria as arrow head.
The CBN and the other lending institutions agreed to seize the bank savings of customers that borrow money and refuse to pay back, saying the deposits in the customers’ other banks’ accounts should be used to service the unpaid loans.
CBN Deputy Governor (Financial System Stability), Mrs. Aishah Ahmad, said, “I am not unaware of the reasons why credit has not been growing. Part of that was the appetite of banks to lend, especially where you have customers that have willfully refused to repay their loans.
“At the time we made this pronouncement, the industry loan to Deposit Ratio was around 57 per cent. In our view, if all the banks that are required to meet this threshold do, we will see growth of about N1 trillion. But there are factors that have made it difficult for banks to lend.
“Basically”, she said, “it will contain the Bank Verification Number (BVN) details of customers, and the Tax identification Number (TIN) and more. It will be a commitment or covenant by the customer that in taking the loan, he also agrees and promises to repay the loan.
“And the customer will also agree that in case of default in repaying the loan, the total amount of assets or deposits across the banking industry will be applied towards repaying the loan.”
“We think that there are very many honest Nigerians that are willing to take loans, and repay their loans. But those who have refused to pay back their loans are affecting the chances of more people having access to loans. I am very optimistic that the policy will enable the banks lend more, and make all Nigerians have access to loans, especially SMEs.”
The banking sector is embattled by many loan defaulters who seem to have defied other known institutionalized threats.
Many of them are big-time players cutting across all sectors.
They include businessmen and even politicians.
Although names have ben published on several occasions, nothing much has come out of it, not even with the intervention of a recovery agency like AMCON.
Some observers, however, blame bank managements too whom they accuse of subverting the system to give loans in questionable circumstances.
