Cbn adopts new measure to tackle loan default rising npls

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CBN Adopts New Measure to Tackle Rising NPLs

In a bid to tackle the growing problem of non-performing loans (NPLs) in the Nigerian banking sector, the Central Bank of Nigeria (CBN) has introduced a new measure aimed at reducing the risk of loan defaults.

The new measure, which was announced by the CBN Governor, Mr. Godwin Emefiele, at a press conference in Abuja, involves the introduction of a new loan classification system that will enable banks to better identify and manage NPLs.

According to Emefiele, the new system will require banks to classify loans as either "standard", "substandard", "doubtful", or "loss" based on their creditworthiness and repayment history. This will enable banks to take prompt action to recover or write off bad loans, thereby reducing the risk of NPLs.

The CBN Governor also announced that the bank will be introducing a new framework for loan restructuring, which will enable banks to restructure loans that are at risk of default. This will involve the creation of a new loan product that will allow borrowers to restructure their loans and make regular payments over a longer period.

Emefiele also stated that the CBN will be increasing its monitoring and supervision of banks to ensure that they are complying with the new measures. He warned that any bank that fails to comply with the new measures will face severe penalties, including fines and even revocation of its banking license.

The introduction of the new measure is seen as a major step towards tackling the growing problem of NPLs in the Nigerian banking sector. NPLs have been a major concern for the CBN and the banking industry in recent years, with many banks struggling to recover bad loans.

The CBN has been working to address the problem of NPLs through a number of measures, including the introduction of a new loan classification system and the creation of a new loan product for small and medium-sized enterprises (SMEs). The bank has also been working to improve the credit culture in the country by promoting financial inclusion and increasing access to credit for small businesses and individuals.

The new measure is expected to have a positive impact on the banking sector, as it will enable banks to better manage their risk and reduce the risk of NPLs. It will also help to promote financial stability and increase confidence in the banking system.

In conclusion, the introduction of the new measure by the CBN is a major step towards tackling the growing problem of NPLs in the Nigerian banking sector. The measure is expected to have a positive impact on the banking sector and promote financial stability in the country.