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Wednesday, October 27, 2021

How bank debtors exploit judiciary to invade debt repayment ~Emefiele

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The Central Bank of Nigeria (CBN) has attributed the slow debt recovery in the banking industry to the lack of prioritisation of credit recovery matters by the Nigerian judicial system to frustrate debt recovery efforts of financial institutions in the country.

According to the CBN Governor, Godwin Emefiele, many recalcitrant debtors exploited the loopholes in the nation’s judicial system to invade repayment of their debt to banks.

The governor, who spoke at a workshop for judicial officers on recent reforms of the banking financial services sectors in the country, emphasised the importance of the judiciary in upholding CBN’s mandate and ensuring orderly operation of the financial system.

He said that supervisory observance indicated that recalcitrant debtors had exploited the non-prioritisation of credit recovery matters in the Nigerian judicial system to frustrate debt recovery efforts by financial institutions.

“The Special Tribunal, together with the Bank’s Policy on Global Standing Instruction (GSI), will address the incidence of non-performing loans that has posed a great threat to the Nigerian financial system,” Emefiele said.

Emefiele added that the regulatory bank was currently informally engaging key stakeholders in the judiciary to operationalize the provision of BOFID in regards to accelerate debt recovery.

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The CBN governor, who was represented by the Deputy Governor, Financial System Stability, Aisha Ahmad said the Banks and other Financial Institutions Act, 2020 was expected to reinvigorate the Nigerian banking sector as it would engender a sound and stable financial system that would support sustainable growth and development of the Nigerian economy.

He said the BOFIA 2020 also strengthened the Anti-Money Laundering and Combating Financing of Terrorism Framework by mandating regulated entities to comply with AML/CFT and cybersecurity regulations.

“This comes at a very auspicious time as the nation continues to advance in its adoption of digital economy; which has heralded the birthing of Nigeria’s Central Bank Digital Currency – the e-Naira,” he added.

Emefiele also pointed out that the BOFIA contained provisions to effectively manage unclaimed funds or abandoned property in dormant accounts maintained with banks, specialised banks and other financial institutions, as well as recovery tools for failing banks.

“BOFIA 2020 also provides enhanced recovery and resolution tools for failing banks, specialised banks and other financial institutions in order to prevent systemic crisis, maintain financial system stability and sustain depositor confidence,” he explained.

“The Special Tribunal for the Enforcement and Recovery of Eligible Loans was introduced in the Act to accelerate credit recovery processes and enforcement of collateral rights.

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