Senate Passes Bill That Allows Bank To Automatically Debit Loan Defaulters

If you have an outstanding loan with one of the now numerous loan offering services in Nigeria. The senate is coming for you.

The Senate on Tuesday 8 of December, 2020, passed a bill for second reading, that will allow banks to recover loans from defaulters, place them on watchlist and blacklist them without the borrowers consent. Most importantly, defaulters’ other bank accounts can now be debited automatically, without the defaulters’ consent.

The bill was sponsored by Senator Sani Musa, who is seeking an Act to establish a unified scheme for a sound financial system that will facilitate and improve credit repayment culture in the country. The creditor banks will be able to take money from the defaulters’ other bank accounts through their bank verification number, BVN whether the defaulter likes for or not.

He said the bill would provide penalties for breaches and violation of obligations and enhance loan recovery across banking sectors in Nigeria.

He said the core of financial system of any country is the commercial banks because they have the potential to apply the full weight of credit facilities for the development and growth of the country’s economy.

He said

The situation of Nigeria today demands an injection of healthy bank credit and recovery system that will effectively fasten the pace of the growth.

However, every lending institution finds itself from time to time with loans of which the risk is loss is greater than anticipated.

In every lending environment, there are two types of borrowers–the good and the bad.

Lest we forget, before the deregulation of our banking system, the ability of our banks to recover loans has been the reason behind the collapse of many commercial banks.

The principles behind this bill is to facilitate and improve credit repayment culture, streamline loan recovery and as well as watchlist frequent loan defaulters with a view to track and blacklist them.

The bill was refered to the Senate Committee on Banking, Insurance and other Financial Institutions, for second reading.