Banks Seek Restructure of Customer Loans- CBN

As the coronavirus pandemic hit economies of different nations, some banks in the country have applied to the Central Bank of Nigeria, CBN, seeking permission to restructure about 32,000 loans for individuals and businesses. 

The 17 banks seeking this request explained that these individuals have been negatively affected by the coronavirus virus pandemic causing the k to be unable sustain the repayment plan. 

Deputy Governor, Financial System Stability Directorate of the bank, Mrs Aishah Ahmed, disclosed this in the personal statements of members of the Monetary Policy Committee during a meeting held in May 2020, posted on the bank’s website.

The 32,000 loans for individuals and businesses represent 32.94 per cent of total industry loan portfolio, with the manufacturing and general commerce sectors constituting the bulk of the restructured facilities, Ahmed said. 

She said, “As  at end-May  2020,  staff  reports indicate that 17 banks  submitted  requests to restructure  over  32,000 loans for individuals and businesses  impacted  by the  pandemic, representing 32.94 per cent  of  total  industry  loan  portfolio,  with the manufacturing  and  general  commerce sectors  constituting the bulk  of  the restructured facilities.”

She added that results from ongoing impact assessment of COVID-19 effects on impairment by banks, “indicate modest impact given regulatory policy measures already implemented. These, coupled   with close   monitoring   by   authorities   and enhanced risk management practices by financial institutions, would help to mitigate the emerging risks and preserve financial system stability.”

Ahmed maintained that banks’ financial soundness indicators had remained strong, despite the headwinds and rapid expansion of credit-driven by the Loan to Deposit Ratio (LDR) policy, added that the industry remained exposed to shocks from spillover effects of the pandemic on macroeconomic conditions.

Another Deputy governor of the apex bank, Shonubi Folashodun, said though global economic challenge had implications for the Nigerian economy, current trends in the domestic macro-economic gave some hope and opportunity to ward-off damaging spillover.

According to him, “Sustained resilience and relative stability of the banking system at this critical time provides   opportunity to further support the economy to overcome the negative impact of the crisis.  Increasing bank credit, as a result of the LDR policy, is a sure way to help businesses survive extended shut-down and keep the productive sector functioning.”

The CBN governor, Godwin Emefiele, observed that the growth in credit was indicative of the potency of the bank’s LDR policy and the need to sustain credit flows to the private sector, especially at a time when the economy needed to indefatigably support its productive machinery.

He further added that it was important to ensure credit flows to strategic and high impact private sector ventures through an effective collaboration of all stakeholders, especially on the backdrop of the imminent economic downturn.