ICA recommends growth strategies for healthy credit economy
Institute of Credit Administration (ICA) has emphasised the need to enact policies and provide incentives that encourage growth of the credit economy and boost a healthy financial sector.
It gave this advice in the ‘ICA blueprint report for growth, development and sustainability of financial services sector in Nigeria’ released, yesterday.
The report, signed by the Institute’s Registrar/CEO, Prof. Chris Onalo, noted that growing non-performing loans have been a major source of concern since 2009 and that this was caused by inadequate credit risk assessment and management, inadequate loan monitoring and economic recession, among other factors.
It noted that the finance sector is the engine of economic growth and it provides funds/access to enable entrepreneurs in other sectors grow the economy to achieve the Gross Domestic Product (GDP).
On incentives, the report said it was relevant to restructure credit by increasing the tenor and decreasing the interest rate to enable defaulters get back in business.
It said banks should be closer to the obligor to know precisely where and how funds are deployed, as most defaults are because of poor monitoring by banks. While noting that early detection can prevent total deterioration, it said preventive measures should be in place.
The report wants “enforcement of credit scores to go beyond being able to access bank loans, and that bank defaulters should not easily access certain services to serve as a deterrent to all.”