By John Joseph
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The Central Bank of Nigeria (CBN) has unveiled plans to integrate Primary Mortgage Banks (PMBs) and Microfinance Banks (MFBs) into the Global Standing Instruction (GSI) platform. This initiative aims to tackle the growing challenge of non-performing loans in the financial sector, which has been a major concern for stakeholders.
The GSI platform, first implemented in August 2020, enables creditor banks to recover overdue debts from defaulting borrowers without their consent. This is achieved through a direct set-off from funds held in the borrower’s qualifying accounts across participating financial institutions.
CBN Governor, Olayemi Cardoso, disclosed the development during the 2024 Bankers’ Night held in Lagos. He emphasized the importance of strengthening the financial sector, particularly PMBs and MFBs, to enhance their efficiency and impact.
Strategies for Strengthening the Financial Sector
Implementing model mortgage foreclosure laws to stimulate lending and reduce delinquency
Integrating PMBs and MFBs into the GSI platform_ to minimize non-performing loans
Leveraging Development Finance Institutions (DFIs) to provide increased on-lending facilities to well-managed Other Financial Institutions (OFIs)
Cardoso highlighted the pivotal role OFIs play in boosting economic productivity and expanding access to financial services for underserved individuals and businesses. He noted that the banking sector remains resilient, with key indicators showcasing its strength.
*Efforts to Enhance the Banking Sector*
– _Bolstering banks’ capital buffers_ to meet revised capital requirements by 2026
– _Promoting financial inclusion_ through innovations in the fintech space
– _Addressing delays in payment gateways_ to ensure trust in digital transactions
The CBN governor expressed concerns over delays in payment gateways, emphasizing the importance of trust in digital transactions. To address this, the CBN plans to impose strict penalties on non-compliant institutions and strengthen Know-Your-Customer (KYC) protocols to prevent fraud.
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