The Chief Executive Officer, CR Services, Mr. Taiwo Ayedun, said in a statement presented at the 2012 Annual Stakeholders’ Forum of Bank Directors’ Association of Nigeria that there was no way banks in the country would grow with huge non-performing loans on their balance sheets.
Ayedun said in the statement made available to our correspondent on Tuesday, “In developed countries, problems of non-performing loans are solved through the services of credit bureaux.
“Nigeria can also overcome this problem and experience exponential growth in consumer lending with the concomitant benefits to the economy by aggressively engaging the services of credit bureaux.”
Credit bureaux offer credit reporting, which is the exchange of permissible information on borrower performance and repayment behaviour.
Information usually collected by the bureaux include name, address, phone number, loan amount, loan date, performance status, etc.
The information can be sourced from lenders, insurance companies, landlords, bankruptcy records and court judgments, among others.
Ayedun said, “For Nigerian banks to grow and make profits, they must lend to the millions of employed Nigerians and businesses that need the loans and will repay, and this can only be achieved by engaging the services of credit bureaux.
“Beyond this, credit bureaux will help to reduce the incidence of non-performing loans, which prompted the recent banking crisis.”
He said it with credit bureaux, it would become easier and faster for banks and other lending organisations to identify good borrowers and decide whether to give loans or not with credit reporting.
The CR Services boss said, “Credit bureaux make it easier to extend credit to the millions of individuals, households and businesses, resulting into growth in demand for goods and services, investment by businesses and increased economic growth.
“It is for this reason that more and more countries are engaging the services of credit bureaux, and today, all successful modern economies have established credit reporting infrastructure.”
He pointed out that there was huge opportunity for increased credit growth and profitability in Nigeria, given the high number of employed people without access to bank loans.
According to Ayedun, out of the 42 million Nigerians that are gainfully employed, less than 1.6 million have access to loans from the banks.
He said the problem, however, was that banks presently preferred to lend to corporate bodies and high net worth individuals, which was due to a lack of mechanism to identify individuals who were good borrowers.