The Central Bank of Nigeria (CBN) has unveiled plans to incorporate Primary Mortgage Banks (PMBs) and Microfinance Banks (MFBs) into the Global Standing Instruction (GSI) platform, a move aimed at addressing the rising challenge of non-performing loans in Nigeria’s financial sector.
- Loan Recovery Mechanism
The GSI platform, launched in August 2020, allows creditor banks to recover overdue debts directly from funds held in a borrower’s qualifying accounts across participating financial institutions, bypassing the borrower’s consent. - Enhanced Financial Stability
- Integration of PMBs and MFBs into the GSI system will enhance loan recovery processes and reduce the prevalence of non-performing loans.
- This initiative is part of broader reforms to strengthen Other Financial Institutions (OFIs), which play a critical role in boosting financial inclusion and supporting underserved segments.
- Support for MSMEs and Underserved Populations
The inclusion of OFIs such as PMBs and MFBs is expected to expand access to credit for micro, small, and medium enterprises (MSMEs), aiding economic recovery and growth.
Governor Olayemi Cardoso, speaking at the 2024 Bankers’ Night in Lagos, outlined the CBN’s strategic goals:
- Implementing mortgage foreclosure laws to encourage lending and reduce defaults.
- Leveraging Development Finance Institutions (DFIs) to provide increased on-lending facilities.
- Strengthening the operational efficiency and impact of OFIs.
Cardoso commended the resilience of Nigeria’s banking sector, highlighting:
- Non-performing loan ratio within the prudential benchmark of 5%.
- Liquidity ratio exceeding the regulatory floor of 30%.
These metrics underscore strong credit risk management and the sector’s ability to support economic recovery.
Nigeria’s fintech ecosystem continues to lead Africa in financial inclusion and innovation:
- Several Nigerian fintech firms achieved unicorn status in 2024, driving growth in digital transactions.
- Cardoso emphasized the need for robust Know-Your-Customer (KYC) protocols and consumer protection to build trust and address delays in payment systems.
Future Outlook
The integration of PMBs and MFBs into the GSI platform reflects the CBN’s commitment to:
- Strengthening Nigeria’s financial system.
- Expanding access to credit.
- Driving economic recovery and sustainable growth through technology and innovation.
As Governor Cardoso affirmed, “Through strengthened institutions and innovative platforms, we can create a robust financial system that works for all Nigerians.”
