The Implications of the new Guidelines on Global Standing Instruction by the Central Bank of Nigeria

The Central Bank of Nigeria (CBN) recently released new guidelines targeted at facilitating an improved credit repayment culture, reducing non-performing loans and watch-listing loan defaulters. The guidelines tagged ‘‘Guidelines on Global Standing Instruction (GSI) – Individuals” give Nigerian banks and other financial institutions the authority to debit the bank accounts of loan defaulters across the Nigerian banking system. It is expected to serve as a last resort remedy for creditor banks. It implies that if a borrower fails to pay back a loan, the creditor bank is given the power to recover the loan principal and accrued interest (excluding penal charges) due, from the deposits/investments of the loan defaulter in other bank accounts, without recourse to the defaulter.

The guidelines were initially disclosed through a circular disseminated to Nigerian financial institutions on 13 July, 2020 and took effect from August 1, 2020.