On Tuesday, December 8, the Senate passed for second reading a bill seeking to establish a unified scheme for the financial system.
The Senate bill seeks to allow banks to recover past and due obligations without recourse to the borrower through the use of a Bank Verification Number.
The Senate Bill Sponsor, Senator Sani Musa (APC, Niger) in his presentation during plenary noted that the core of the financial system of any country is the commercial banks because they have the potential to apply the full weight of credit facilities for the development and growth of the country’s economy.
Speaking on the importance of the bill, he said: “Credit is seen as the bloodstream of the banking business. It oils the wheels of development. The situation of Nigeria today demands an injection of healthy bank credit and recovery system that will effectively fasten the pace of the growth.
“However, every lending institution finds itself from time to time with loans of which the risk is loss is greater than anticipated. In every lending environment, there are two types of borrowers–the good and the bad.
“Lest we forget, before the deregulation of our banking system; the ability of our banks to recover loans has been the bedrock behind the collapse of many commercial banks. In most economies, they have experienced a highly increased rate of unemployment; as a result of such negligence of the credit system.
“Today, the situation in Nigeria has become very serious and seemingly intractable; and thereby frustrate our efforts as a nation towards the private driven economy; as well as economic diversification and growth.”
According to him, there is a court judgement that gives banks the right to take back their money from defaulters; from any of the banks where they have deposits.
He further stated that the principle behind the production of this bill is to “facilitate and improve credit repayment culture; streamline loan recovery and as well as watchlist frequent loan defaulters with a view to track and blacklist them.”
The Bill was referred to the Senate Committee on Banking, Insurance and Financial Institutions.Photo Credit: Getty