‘Quality credit data management needed to tackle over N2tr NPLs’

With over N2trillion of non-performing loans (NPLs) in the nation’s financial services sector, stakeholders have advocated the promotion of effective credit risk operations through the deployment of quality and robust credit data management.

According to them, such data management will promote healthy credit services in the financial services industry in Nigeria.

Indeed, the stakeholders while at a business forum organised by the Chartered Institute of Bankers Centre for Financial Studies (CIBNCFS) and the Credit Bureau Association of Nigeria (CBAN) in Lagos, expressed concerns about the failure of businesses and rising rate of NPLs.

The Registrar/Chief Executive, Chartered Institute of Bankers of Nigeria (CIBN), Seye Awojobi, who was represented by the Deputy Director, Membership Services, Segun Shonubi, stressed the need for a more deliberate policy action on credit data management.

He said the unprecedented evolving dynamics in the financial services industry with fundamental shifts in customers’ demands and expectations had aroused a new interest in credit data management adding that without a very strong monitoring template using technology, predatory debtors can deploy the same technology to break all boundaries designed for determining their true credit histories.

Citing the Central Bank of Nigeria’s Financial System Stability Report which revealed that the banking industry’s Non-Performing Loans ratio rose from N1.678bn in June to N2.084tn in December 2016, he warned that this does not augur well for the financial intermediation role of the financial services industry and the economy at large.

While noting that globally, ease of access to credit was critical for business growth, Shonubi said that lending institutions are always wary of the safety of their funds.

Reaching a delicate balance, he added, is the sole objective of an effective credit data management and credit risk strategy by financial institutions.

Also, the Chief Executive Officer/Managing Director XDS Credit Bureau/Chairman, CBAN, Mrs. Mobolanle Adesanya, who was also represented by Olanrewaju Agbede, Head of Sales and Marketing, XDS Credit Bureau in a presentation titled ‘Nigerian Credit Reporting Act: Promoting Effective Credit Risk Operations In Nigerian Banking Sector’, said that the recently signed Credit Reporting Act was meant to promote responsibility in the credit market by encouraging responsible borrowing, avoidance of over-indebtedness and fulfilment of financial obligations by all parties.

According to him, the Act would not only guarantee more robust Credit Reporting System in the country, but it would promote financial inclusion and also improved credit information sharing between financial and non-financial sectors and ensure more solid platform for better access to finance for SMEs with more influx of Credit Information on Data Subjects.

He said that the Act allows the credit information providers to receive services from a Credit Bureau subject to the execution of a Data Exchange Agreement with the Credit Bureau and with the consent of the Data Subject and to also maintain the integrity and protection of data submitted by it to a Credit Bureau.