Delinquent Debtors: Stakeholders Call for International Data Sharing Agreement


Some stakeholders have stressed the need for the Central Bank of Nigeria (CBN) to enter into an international data sharing agreement with other regulators across the globe to expose bank customers who take loans and relocate to other countries without any repayment plan.

This is as findings revealed that some persons who had deliberately collected loans from commercial banks relocate to Europe, North America and some other continents without any repayment plan. A large number of those who perpetrate such act are bank staff who have easier to access such loans.

The development, according to industry analysts, could contribute to the rise in the industry non-performing loans (NPLs). Therefore, they stressed the need for the CBN to push for a cross-border data sharing arrangement.

Speaking on the development, a senior banking officer who pleaded to remain anonymous, said: “We have seen the trend for about two years whereby a large pool of customers and staff who want to leave the country, knowing that when they leave the country, the banks would not have any way of reporting them to bureaus internationally.

“For the bank I work in, it is in an excess of over N500 million. In my last check, over 50 staff had taken loans and have left the bank knowing they were going to leave the bank and this figure continues to grow.”

She added: “This behavior cuts across the industry and when you talk to colleagues in other banks, they would tell you they are seeing same thing.

“It would be helpful if there is an international credit bureau database where we can report, in such a way that if the person goes to Canada or Australia and wants to take a loan, and they know you have a delinquent loan in your country it would also limit their ability to access loans.”

From a risk management perspective, a risk manager of a bank suggested that new mechanisms be put in place to avert risks that could emanate from such loan default and also called for data sharing arrangement.

He said: “Banks and lending institutions can put in a clause on the forms to inquire if the customer has plan to relocate and some might be truthful because now, no one is asking that question if a customer is likely to relocate.”

Furthermore, he advocated for intelligence sharing, saying, “In Nigeria, we have credit bureaus and I believe the credit bureaus need to step up to a step higher by linking their database internationally so that if you go abroad, your bad credit reporting would still follow you especially because most of them leaving are going there to get mortgages.

“Also, within Nigeria, finance institutions also need to start sharing a lot of information. As it is now, it is not all institutions that are on the credit bureaus and you find that people take loans from various banks in small pieces and then they can join them together before they run away.

“Another suggestion is that they need to go back to the correct fundamentals of lending in the sense that they should not overlook things like guarantors when granting loans,” he added.

On her part, financial institutions analyst at Agusto & Co, Mrs. Ada Ufomadu, believes that the NPL from customer might not be high enough to damage banks’ books.

She explained: “Even if a bank experiences it and they have non-performing loans, the volume would not be large and it is not something that would drive the banks NPL from three per cent to 10 per cent.

“I know the NPL ratio of most retail loans are quite high, but it is in small bits and you might not see a big impact on the NPLs unlike the big corporates. The volumes are too small to worry about.”

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