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Clarify GSI, sandbox policies for MFBs, experts urge CBN

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, 2020.

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, NIBSS’ Head of Emerging Markets and Other Financial Institution, 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.

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