Banks begin deducting loans from the accounts of chronic debtors.

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According to findings, Deposit Money Banks are recovering debts owed by chronic debtors from their accounts in other banks in order to slow the growth of non-performing loans in the industry.

According to Punch, data from the Central Bank of Nigeria and the National Bureau of Statistics show that NPLs in banks fell slightly from N1.2tn at the end of the second quarter of 2020 to N1.1tn at the end of July 2021.

Despite an increase in gross loans in the industry during the period, this is the case.

The CBN said the measures it introduced such as the Global Standing Instruction to reduce banking sector risks was helping to reduce the Nonperforming loans in the sector. According to the CBN, the GSI, which commenced on August 1, 2020, allows banks to recover the outstanding principal and interest upon default from any account maintained by the debtor across all financial institutions in Nigeria.

It said the slight improvement reflected the strengthening of risk management practices, the GSI policy, and regulatory forbearance that had allowed banks to restructure credits impacted by the COVID-19 pandemic. Figures obtained from the NBS on the banking sector for Q3 2020 showed that while the gross loans in the lending industry stood at N18.9tn, the total non-performing loans stood at N1.2tn.

The latest figures from the CBN showed that while the gross loans rose to N22.2tn, the NPLs fell slightly to N1.1 trillion.

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