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How Digital Lenders In Nigeria Can Leverage Global Standing Instructions For Effective Debt Recovery

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  Introduction The digital lending industry in Nigeria has grown rapidly in recent years, providing an alternative source of credit for many individuals and small businesses. However, non-payment of loans, also known as non-performing loans (NPL), has been a significant challenge, with Digital Banks like Kuda reporting  NPL rates of 69%   compared to traditional  banks' rates of 4.4% . Recently, regulatory bodies like the Federal Competition and Consumer Protection Commission (FCCPC) have started  cracking down   on harmful debt collection practices such as “naming and shaming”, threatening customers and unlawful data collection employed by a majority of digital lenders in Nigeria. This underscores the need for lenders to adopt compliant recovery alternatives. Thankfully, in 2020, the CBN implemented a framework called Global Standing Instructions (GSI) that allows creditors to directly recover loan amounts from a borrower's bank accounts across participating financial institut
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How to Avoid Losing Your Microfinance (Digital) Bank Licence in Nigeria

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 Guide to Ensuring Regulatory Compliance for Microfinance Banks in Nigeria Introduction In May 2023 ,  the Central Bank of Nigeria (CBN) revoked the operating licences of some Microfinance Banks, Finance Companies and Primary Mortgage Banks, citing inactivity, insolvency, failure to render returns, closed shop, and non-compliance with regulation. Why does this concern you? As a founder, VC, or investor in digital banks or the general banking industry, it is essential to keep your investment secure and safe from regulatory penalties that could have been easily avoided. Banking is a heavily regulated industry and penalties for non-compliance can cost investors time, money, and sometimes your entire investment. Why does the CBN revoke Microfinance Bank Licences? Regulatory compliance is imperative for fintech companies and microfinance banks operating in Nigeria to retain their license. The CBN is empowered to revoke licenses of financial institutions that fail to adhere to its guidelines
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