Debtors in the Nigerian financial space may have to tighten their belts soon, as the Central Bank of Nigeria (CBN) has concluded plans to prevent them from accessing further loans through the use of Bank Verification Numbers (BVN). CBN Governor Godwin Emefiele made this known at the end of a retreat held by the bankers committee.
“We are going to raise the standard to a point where there will be credit scoring for people who take bank loans. And when you are scored low or you are scored zero, we are going to use the BVN to block you from having access to any finance in the Nigerian banking or financial services industry.”
The apex bank had recently issued a circular authorizing banks to use BVNs to block customers involved in fraudulent transactions.
Implications of the move
Serial debtors will be forced to pay back loans or approach banks for restructuring. A recent report by the Nigeria Deposit Insurance Corporation NDIC had revealed that the major cause of bank failure in the country was insider loans that were not repaid. Enforcement could however slow access to credit in the country, as individuals would have to get a credit scoring before accessing loans.
Credit bureaus have their work cut out
Creditt bureaus which the apx bank intends to rely on, to get this done have yet to find their footing in the country. The lack of a proper identification system in the country means the bureau finds it difficult to access consumer information.
Does this apply to all loans ?
The apex bank should have given a deadline before rolling out the policy. This would enable all parties, especially the credit bureaus to get their acts together. The policy is unclear if it applies to loans of a certain size or a blanket generalization.