IPNEWS: The Central Bank of Liberia (CBL) expresses concern over the alarming level of non-performance loans in the Liberian banking sector.
The CBL says delinquent borrowers risk being banned from accessing banking services in Liberia if they continue defaulting on repayment. The warming came Tuesday, December 13, 2022, after CBL expressed concern about the high level of non-performing loans that have overwhelmed the Liberia banking sector.
The CBL said it is deeply concerned about the persistent failure of non-compliance, delinquent businesses, and individuals to settle their loan obligation to commercial banks.
Meanwhile, the Central Bank of Liberia has given all non-compliance, delinquent borrowers up to the first quarter of 2023 to settle or restructure their upstanding obligations to the commercial banks.
The CBL also called on commercial banks to put in place appropriate measures to reform internal procedures to improve loan recovery processes.
CBL Decries ‘Misuse of Debtors Funds’
It can be recalled on Tuesday, December 13, 2022 the Central Bank of Liberia, under pressure from donors and stakeholders came out strongly against debtors, cautioning that it is strongly concerned about the persistent failure of non-compliant delinquent businesses and individuals to settle their loan obligations to the commercial banks, despite having the capacity and ability to do so. “This situation is not only adversely impacting the viability of the banking system but also amounts to misuse of depositors’ funds and poses a significant risk to public resources in terms of protection of the system,” the CBL said in a statement Tuesday.
Considering the development and considering the ramification of the actions of the non-compliant delinquent borrowers, the CBL issued the following directives, stating that:
All non-compliant delinquent borrowers have up to the end of the first quarter of 2023 to settle or restructure their outstanding obligations to the commercial banks. Those who fail to comply, will be subjected to stringent supervisory actions, including but not limited to restriction from accessing banking services in keeping with CBL’s directive regarding non-compliant delinquent borrowers.
Secondly, the CBL said all commercial banks are required to take appropriate actions and/or measures to reform their internal procedures and processes to improve their loan recovery processes, including administrative measures to hold accountable staff for poor underwriting standards and practices.
The CBL says it is imposing the appropriate penalties against commercial banks that fail to adhere to its directive and the Bank’s Directive # CBL/RSD/DIR/002/2017, which bars commercial banks and other regulated financial institutions from providing financial services to delinquent borrowers that fail to resolve their delinquent status. “In addition, the Regulation and Supervision Department is hereby directed to work with the Liberia Bankers Association (LBA) to develop a comprehensive loan recovery strategy to address the NPL situation in the banking system.” By James Lehmer Hiama Jr.; hiamajames@gmail.com; 0770334857/0888270604
