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CBN Orders Banks To Verify Borrowers’ Creditworthiness From Credit Bureaux

As part of its sustained monetary policy efforts to reduce Non-Performing Loans (NPLs) problem in the financial system, the Central Bank of Nigeria (CBN) has instructed banks and other lenders to obtain reports of borrowers from licensed credit bureaux as part of their due diligence in granting loans.

The apex bank, in its latest report on ‘Monetary, credit, foreign trade and exchange policy guidelines for fiscal years 2020/2021’, stated that the operations of private credit bureaux would be guided by the provisions of the Credit Reporting Act, 2017 and the National Credit Reporting System Regulation, 2019.

It further directed that all banks and other financial institutions must continue to “have data exchange agreements with at least two licensed credit bureaux; and obtain credit reports from at least two licensed credit bureaux in addition to the CBN CRMS before granting any new credit facility, or when reviewing, renewing or restructuring an existing facility.

The banking sector regulatory institution in the report also required that banks and other lenders must “obtain credit reports for quarterly credit reviews on all existing facilities from at least two licensed credit bureau” as well as “upload loan data on all its existing credit customers to credit bureaux with which it has executed data exchange agreements.”

The CBN also directed that banks should update any change in the data submitted to a credit bureau pursuant to relevant provision of the Act, at least on a monthly basis or more frequently, or in accordance with a schedule provided by the credit bureau.

According to the regulator, in order to sanitize the credit space and unlock access to consumer and retail loans, the lenders should require all identified data controllers to provide data to a central depository, adding that its policies, guidelines and processes for the prevention, management and containment of bank systemic distress and crisis would continue to apply.

It maintained that the banks and other financial institutions engaging in lending to customers must ensure strict compliance with the requirements of the ‘Credit Risk Management System’ as stipulated in its circular to the effect.

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