ABP: CBN Mulls Triggering Global Standing Instruction to Compel Loan Defaulters to Pay Up

*Maize association rallies members

James Emejo in Abuja

The Central Bank of Nigeria (CBN) has warned that it may activate the Global Standing Instruction (GSI) against loan defaulters under the Anchor Borrower Programme (ABP).

The central bank explained that the idea became necessary in order to compel farmers who had accessed loans under the programme to offset their indebtedness to the bank after repeated appeals to them appeared to have fallen on deaf ears.

This was disclosed by the CBN Senior Manager, Development Finance Office, Port-Harcourt Branch, Mr. Celsus Agla, during a strategic meeting with maize farmers and stakeholders from the south-south and south-east geo-political zone in Port Harcourt, Rivers State.

Essentially, the GSI, which was introduced by the apex bank in 2020, seeks to among other things, promote a sound financial system in Nigeria, facilitate an improved credit repayment culture, reduce Non-Performing Loans (NPLs) in the banking industry, and watch-list consistent loan defaulters.

According to the CBN, “The GSI shall serve as a last resort by a creditor bank, without recourse to the borrower, to recover past due obligations (Principal and Accrued Interest only, excluding any Penal Charges) from a defaulting borrower through a direct set-off from deposits/investments held in the borrower’s qualifying bank accounts with participating financial institutions.”

However, speaking while responding to submissions by the national and state leadership of the Maize Association of Nigeria (MAAN), Agla said as a last resort, the central bank may have to deploy the GSI to get the farmers to repay their loans.

The CBN’s position came against the backdrop of accusations that some farmers who accessed loans under the ABP were reluctant to repay their liabilities, and even mistaking the credit facilities for grants despite repeated interventions from the central bank that the intervention fund must be repaid to the bank.

Agla, nonetheless, pointed out that if the defaulters proved stubborn, the, “GSI is a system whereby if you have an account with any bank outside say Unity Bank and there’s money in that account; because your BVN is attached to these loans if the GSI is triggered, the monies in those accounts can be collected to repay the loan to Unity Bank.”

Meanwhile, the association is currently engaging with maize farmers and stakeholders across the country on the ABP loan recovery initiative.
The dialogue was led by MAAN National President, Dr. Bello Abubakar, along with other officials.
He said the objective of the meeting was to review the impact of the loan on food security, deliberate on loan repayment strategies and the way forward for maize farmers.

Abubakar pointed out that despite the numerous gains so far recorded in the ABP implementation, there had been challenges particularly as some farmers across the country have misconceptions about repayment.

He said some of them mistook the loan for grants, adding that some farmers even acted as if they were surprised when asked about the repayment.
He also listed other challenges as late disbursement of funds, natural disasters namely floods, droughts, COVID-19, insecurity and political factor.
Abubakar said some politicians created wrong impressions that the loan was from them and that it was free.

He added that these challenges had affected the performance of the loan repayment.
Nonetheless, he said the association would work with the central bank and private finance initiatives to deploy all legal means possible to get defaulters to repay their loans.

He added, “We have to make sure that we have taken all the necessary actions and measures to make the farmers who took these loans pay up”
“So, that is why we decided to go round all the 36 states of the country starting with the South-South and South-East to come together and meet with our stakeholders so that we can discuss, deliberate and come up with a very concrete solution to this problem, what way do we go to ensure these farmers pay up these loans.
“We know there are some challenges but a loan is a loan, the loan is not a grant, the loan is not a subsidy, so, therefore, we must follow these farmers to the end and make sure they repay back the loan and that is why we are here.”