The Central Bank of Nigeria (CBN) and commercial banks in the country have reached a consensus on new modalities that will be used in making sure those who take loan from banks pay back.

Speaking with newsmen after the Bankers Committee meeting on Monday, Aishah Ahmad, CBN’s deputy governor, said that loan defaults will be settled using deposits made in other banks.

Ahmad said the move was to encourage financial institution to increase lending.

She said one of the reasons credit had not been increasing was because customers deliberately refuse to pay loans they took from bank.

She said, henceforth, new clause would now be added in the offer letters that would be granted.

She said “We are not unaware of the challenges/reasons why credit has not been growing. Part of that was the appetite of banks to lend especially when you have customers that willingly refuse to pay their loans.

“In this respect, we have come up with a new clause that will be included in the offer letters that will be granted going forward.

“This is going to be a credit risk protection clause. Basically, it will contain the BVN details and TIN of the customers and more or less it will be a commitment on the part of the customers that you agree that should you default on the loan, the total amount of deposits you have across the banking industry would be applied towards repaying the loan.

“This is not uncommon because banks already have rights of set-off within a bank. Which means you take money from a bank, the bank usually has a clause in the letter that allows your bank to repay your loan from the assets you have with the bank.

“This is just extending it across the industry.”

In its recently released Consumer Protection Guidelines on Responsible Business Conduct document, the CBN had directed banks to get the credit history of customers before approving loans.