Following the directive by the Central Bank of Nigeria (CBN) that banks in the country should publish the names of debtors whose obligations have fallen due from August 1, banks across the country have intensified publicity in a bid to convince their customers to pay-up or restructure their portfolio. To this end, the national dailies, in the last few weeks, have been bombarded with advertorial by the banks reminding debtors of their obligations before the deadline. A cursory read of the advertorials placed by different banks show mixed tone of message. While most advertorials have the tone of appeal, some others have confrontational tone. According to analysts, these advertorials mask the true intent of the banks.
Some banks that have the capacity to recover their debts without prodding from the CBN, are using appealing tone; suggestive of their reluctance to publicly engage their customers. “A bank with a long-standing relationship with a customer could be jeopardised by this directive. So there is need for the banks to be cautious with their tone,” says a banker with Zenith Bank who pleaded anonymity. Some analysts are at a loss why the CBN engaged in this strict act when they claim that the industry’s non-performing loan stands at 5 percent. “Why tell banks to publish names of debtors when the NPL is about 5 per cent. Is this the wish of the commercial banks or is there more to this?,” asks a management staff of Zenith Bank who pleaded anonymity.
In the same vein some banks that have had it difficult recouping their money are using confrontational tone; suggestive of their desperation. One advertorial by a first generation commercial bank notified its customers of the CBN directive, and urged debtors “to immediately liquidate their indebtedness to the bank”. Failure to do so, “will constrain the bank amongst other measures, to submit their names to the CBN…..” Another bank urged its debtors “to take immediate steps to defray their obligations”, failing which the bank will be compelled to comply with the said CBN directive and will proceed to implement the resolutions.
Analysts are disturbed by this directive, which to them is the criminalisation of credit. This could worsen the poor credit situation in the country as banks would use this as an excuse to further side-line small businesses from accessing loans. However, some bankers have endorsed the CBN move; describing it as necessary to resolve insider loans. “Insider loan is still a problem in the banking sector despite CBN’s effort to reform corporate governance,” says a management staff of a foreign bank. According to the banker, the CBN wants to unmask debtors in the banks, especially directors of banks whose loans are not performing. On the unintended consequence of restricting credit growth, he advised the CBN to categorise debtors into value of outstanding obligations. “It is useless pursuing an outstanding loan of N1million owed by small business when there is an outstanding director’s loan of say N100million,” he says.
The CBN had earlier in the year issued a directive to banks to start publishing names of debtors from August 1, 2015. Such debtors that failed to meet their principal or interest obligations will have their names sent to CBN, embassies and would also be barred from accessing foreign exchange.
By Osaze Omoragbon