There is an urgent need for the Central Bank of Nigeria (CBN) to clarify the Global Standing Instruction (GSI) and Sandbox policies for Nigerian Microfinance Banks (MFBs) even as all financial institutions are getting ready to embrace the guidelines expected to take off from August 1.
This was the view of experts during a webinar titled; Implications of Global Standing Instruction (GSI) and Sandbox Policies for MFBs, organised by Accion Microfinance Bank in Lagos.
The CBN had issued guidelines aimed at reducing non-performing loans in the banking sector and to monitor chronic loan defaulters. The GSI guidelines give banks the power to debit loan and accrued interest due from bank accounts of loan defaulters across the Nigerian banking system and the Nigeria Inter-Bank Settlement System Plc (NIBSS) is expected to manage the entire operations of the GSI on behalf of banks using customers Bank Verification Numbers (BVN).
However, the Head, Emerging Markets and Other Financial Institution, NIBSS, Samuel Oluyemi, said, there needs to be clear mention of other financial institutions under the sandbox framework and then GSIs for banks and other financial institutions (OFIs) as well as the definition on the point of default.
‘What happens to the loans that have been granted pre-launch of this GSI? We need to look at it very fast in the sense that all the loans that have been disbursed before now to come within the view of the GSI through an administration of the GSI mandate on present loan holders with MFBs. There also needs to be a definition on the point of default whether it is at the point of non-performing loans or a substandard loan,’ Oluyemi said.
He noted that for the integration of GSI for MFBs, another window needs to be created while calling for more activity in BVN validation.
‘Most of the MFBs are on the electronic reference management system of NIBSS and so if the GSI mandate is coming for validation, then another window has to be created. For BVN validation, a lot of people have been saying that the portal is not suitable for operation because of the digital nature of MFBs, we at NIBSS are saying that this is a regulatory inhibition that we all need to collectively join hands to avoid this and so I can only appeal that we all join hands and articulate what our requirements are for BVN,’ Oluyemi said.
Commenting further, Partner, Udo Udoma and Belo-Osagie, Yinka Edu, noted that there are still issues surrounding proprietary information and confidentiality as regards sandbox policies.
She said: ‘The issue is a big one and obviously the benefit that you have is that one has spent time with this innovation. I feel a company needs to think about the right stage to go into the CBN’s sandbox and I also feel the guidelines are lacking here because there is an urgent need for clarity or guarantees that the CBN will keep that sort of information confidential. For now, they are trying to build a competitive market and I do not think that they are actively going to block other people coming up with several ideas.’