This post seeks to examine CBN’s guidelines on GSI in Nigeria. With this in mind, let’s explore certain vital information about CBN’s operational guidelines on GSIs.
Important Facts About CBN’s Operational Guidelines On GSI
The CBN’s Operational Guidelines on Global Standing Instruction. But, individuals (GSI Guidelines) became operational on August 1, 2020.
Essentially, GSIs authorize the recovery of loan obligations due from all and any deposit accounts maintained by defaulters with banks other than the creditor banks.
With the new CBN’s guidelines on GSI, before a borrower can access loans from Financial Institutions (FIs), all accounts must be interlinked with his or her unique BVN. ‘
Importantly, such borrowers are also required to sign off GSI mandates in favour of the creditor bank. This waives any confidentiality or privacy restrictions that the creditor bank may face.
Where such borrower defaults, the NIBSS is legally empowered to debit outstanding loan amounts in bank accounts owned by defaulters provided they are domiciled in Nigeria.
However, creditors must ensure that they comply strictly with the new rules as there are penalties for erroneous implementation.
However, on January 19, 2022, the CBN revised the guidelines, introducing the Global Standing Instruction (GSI)- Individuals primarily to enhance unrestricted loan recovery and continuous loan recovery by creditor banks in Nigeria.
The GSI initiative is a significant leap in the right direction revolutionizing loan recovery especially in the banking sector. The synergy between the stakeholders in the financial industry, the CBN, NIBSS, and other key regulators like the NDPR offers a unified framework for loan recovery stifling the avenues formerly employed by loan defaulters in escaping their loan obligations.
References
1. https://www.jdsupra.com/legalnews/cbn-s-amendment-to-the-global-
standing-9700894/#:~:text=Overview%20of%20the%20GSI%20Guidelines&text=It%20is%
20an%20arrangement%20that,debt%20obligations%20of%20the%20borrower
accessed on April 20 2023
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