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ALERT: Banks will now obtain your credit history from other institutions before giving loans

ALERT: Banks will now obtain your credit history from other institutions before giving loans
August 06
13:53 2019
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The Central Bank of Nigeria (CBN) has directed banks in the country to obtain the credit history of customers before approving loan applications.

The directive was contained in the Consumer Protection Guidelines on Responsible Business Conduct document released by the apex bank on Monday.

It said this, amongst other rules, would ensure that consumers’ capability to repay credits is efficiently assessed.

“Obtain the credit history of consumers from the Credit Risk Management System, Credit Bureaux and other sources of credit reference to ascertain consumers’ outstanding debt obligations and repayment history before advancing credits,” the document read.

It also mandated that banks must offer an alternative repayment method for customers who are unable to meet their repayment obligations due to ill health, unemployment or other disabilities.

In the event of a loan default, the regulatory guideline states that banks must give customers a “minimum period of 6 months from the date of notice of foreclosure, the option of a private sale before commencing foreclosure”.

It also mandates that banks must:

  • Provide customers with a report of sale of the asset stating the process, proceeds, incidental expenses and the net proceeds.
  • Ensure that the net proceeds are immediately applied to the loan account and customers informed of any balance.
  • Be liable for the actions of their agents engaged for the purpose of debt collection.9. Not pass the cost of engaging debt recovery agents to customers.

The apex bank said financial institutions that fail to comply with the regulations will be sanctioned with fines provided in the CBN Act and Banking and other Financial Institutions Act.

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1 Comment

  1. Naira Daily
    Naira Daily August 09, 10:06

    This is a good move for a solid financial structure in Nigeria on the long run. We saw how risky credit management led to a devastating crisis in 2008 in US, Nigeria does not need it.

    Reply to this comment

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August 08, 2019USDGBPEUR
INTERBANK306397354
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KANO361474413
PH361475412
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