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Omodele Adigun
The recent decision by the Bankers Committee to settle predatory borrowers’ debts with their deposits may have, apart from derisking credit, tosome extent, eliminated credit guarantors from the system.
By this, the burden on sureties-to mount endless pressure on defaulters to pay up or go on fruitless search for fleeing debtors- may have gone for good.
Although the latest move applies only to fresh loans, but past guarantors of some small scale credit were reportedly told recently to prevail on the debtors to begin repayment or else inherit the debt burden.
According to the Special Adviser to the Ekiti State Governor on Micro-credit and Enterprise Development Agency, Kayode Fasawe, his agency is exploring ways to deduct the N1.5 billion micro-credit loans from the salaries of the defaulters’ guarantors .
The loans in question were granted under the Small and Medium Enterprise Support Scheme (SMEIS) of the Central Bank of Nigeria (CBN) .
The governor’s aide, who spoke in Ado Ekiti during a meeting with the loan guarantors, said the government, in conjunction with the participating micro-finance banks, was determined to recover all the loans to the last kobo, lamenting that “the attitude of the people on loan repayment has deprived the state of accessing further funds from CBN. This has been counterproductive to the economic development of the state.”
Fasawe may have spoken the mind of the Deputy Governor of the CBN on Financial Sector Surveillance, Mrs. Aisha Ahmad, who said:
“Now we are not unaware of some of the challenges or the reasons why credits have not been growing. Part of that was the appetite of banks to lend especially when you have customers that wilfully refuse to repay their loans. And so in this respect, we have come up with a new clause that will be included in the offer letters that will be granted going forward.
“In addition to that pronouncement, we are looking at the challenges or factors that are affecting banks’ ability or willingness to lend.
“This is going to be more or less a credit protection clause that will be in all offer letters going forward. Basically, it will contain the Biometric Verification Number (BVN) details and the Tax Identification Number (TIN) of the customers. And more or less, it will be a commitment or covenant by the customers that, by taking a loan, you agree and promise to repay the loan and that you also agree that, should you default on the loan, the total amount of assets or the total amount of deposits you have across the banking industry would be applied towards repaying the loan.
“Now this is not uncommon because banks already have something we call Rights of Set-off within a bank. That is, if you take a loan, the bank usually have a clause in the letter that allows it to repay your loan from all the assets you have in the bank and so this is just extending it across the industry.
“We think that there are very honest Nigerians out there that are willing to take loans and repay their loans. However, the few that wilfully do not pay are usually affecting others to have access to this credit. And we are very optimistic that this will enable the banks to lend more with more confidence, enable more Nigerians to get access to credit, particularly those in the Small and Medium Enterprises (SMEs) retail sector.”
Back to the Ekiti debtors, the Director of Small and Medium Enterprise in the Ministry of Investment, Mr Ayo Ilesanmi, speaking in the same vein, said it was quite disheartening that loans beneficiaries in the state considered the money as free gift or their own share of the national cake.
Ileasanmi condemned such belief, saying it had prevented other people from benefiting from government’s support for growing businesses in the state.
On the prospect of his agency’s plan, Fasawe said that over N30million was recovered during the first three weeks of guarantors’ sensitisation through the use of text messages and dialogues.
However, some of the loan beneficiaries, justifying their action, blamed delay in their loans’ repayment on lapses which they said emanated from the lukewarm attitude of the micro-finance banks to recover the loans, promising to pay back the principal based on the tripartite arrangement they would reach with all the stakeholders.
This may be an eye opener for the lenders to be more proactive in their recovery effort.
Recently, the founder and Managing Director of LAPO Microfinance Bank (MfB), Dr Godwin Ehigiamusoe, observed that “one of the things that is very critical about lending is that when you are giving the loan, everybody is smiling. But when it comes to the people making repayment, that is where the challenge is. Whereas, the commercial banks have more deposits than the loans. The Central Bank is even asking them now to do more loans. But for us, we do not have enough deposit. We go to the banks: we borrow from Access Bank; we borrow from FCMB. Some of you know that we borrow from IFC; we borrow from African Development Bank (AfDB). So when you borrow money to give out, then it is also very difficult.”
That is why his MfB may have adopted shyllock-style to recover its debts.
The guarantors, who lauded the state government for giving room for dialogue before enforcing the recovery policy, appealed for extension of time and opportunity to talk to and prevail on the debtors for repayment.
To prevent bad loans, going forward, the apex bank’s Director of Banking Supervision, Abdullahi Ahmed, explained that to complement this initiative, the Bankers Committee would develop a credit scoring system which will enable people with good credit history to easily access loans
“If your score is high, you will be able to access credit easily. That is the whole idea. So, you are going to have a good credit scoring rate or position to be able to access credit.”
