CBN Asked To Outrightly Ban Loan Apps Due To Danger To Nigerian Economy

CBN has been asked to outrightly ban Loan Apps due to the danger to the Nigerian Economy.

 

Newsonline Nigeria reports that the Central Bank of Nigeria (CBN) has been advised to end the operations of loan sharks in the country as they are dangerous to the economy.

 

A former president of the Chattered Institute of Bankers of Nigeria (CIBN), Okechukwu Unegbu, made the suggestion in his reaction to the operations of some digital lending platforms. 

The loan apps have come under fire for their handling of loan recovery which has seen their customers complain of blackmail and harassment.

 

This method of loan recovery is frowned upon by the CBN, which stipulates that financial institutions should be fair and avoid intimidation of debtors in their loan recovery process.

 

The loan sharks have taken advantage of the inability of small businesses and individuals in accessing credit support; however, loan seekers are charged significant interest by the loan sharks and the CBN had previously admitted to difficulty in regulating the digital lending platforms. 

 

According to Unegbu, the CBN can get rid of the loan sharks by empowering the microfinance companies to enable them to carry out their loan provision mandate. 

“The MfBs are better positioned to offer such service, and I’ll urge the CBN to empower the MfBs to be able to carry out their mandate more effectively,” Unegbu told NAN on Sunday, 17 July. 

Last week, Prime Business Africa reported that the Federal Competition and Consumer Protection Commission (FCCPC) disclosed plan to investigate the operations of some digital lending platforms for harassing their customers in a bid to force repayment of loans.

 

FCCPC Chief Executive Officer, Babatunde Irukera, said complaints have begun to emerge again against the loan apps and following the probe, Google will be asked to delist the loan sharks found guilty. 

Speaking about the activities of the loan sharks before he was suspended, the Governor of the CBN, Godwin Emefiele, had stated that: “If you go to a loan shark to borrow, you will pay two or three times the amount in 90 days. When you refuse to pay, they will seize your property; bicycle, or television just to collect N200,000.” 

 

He said because the CBN is not a law enforcement agency like the police, it is difficult to clamp down on the loan sharks, adding that their operational base situated mostly in rural areas also doesn’t help with regulation.