A Bill for an Act to assist banks in efforts to recover bad debts, scaled the second reading at the Senate on Tuesday.
This followed the adoption of a motion by the sponsor of the bill, Sen. Sani Musa (APC-Niger) during plenary.
Leading the debate on the general principles of the bill, Musa said that the proposed law would help to recover past and due obligations without recourse to the borrower, while providing penalties for breaches.
He said that the essence was to enhance loan recovery in the country’s banking sector.
He said that the legislation had become necessary because credit was seen as the life-wire of the banking business.
Musa added that the current situation in Nigeria necessitated the putting in place of a healthy bank credit and recovery system, which would effectively hasten the pace of growth in the financial sector.
“It is unfortunate that every lending institution finds itself from time to time with loans, of which the risk of loss is greater than anticipated.
“In every lending environment, there are two types of borrowers — the good and the bad.
“Before the deregulation of our banking system, the inability of our banks to recover loans has been the main factor behind the collapse of many commercial banks.
“Today, the situation in Nigeria has become very serious and seemingly intractable; thereby frustrating our efforts as a nation towards a private sector-driven economy,” he said.
The lawmaker further noted that even though there was a subsisting court judgement that empowered banks to take back their money from bad debtors, the proposed legislation was necessary.
Deputy Senate President, Ovie Omo-Agege, who presided over the plenary, referred the bill to the Senate Committee on Banking, Insurance and Financial Institutions for further legislative works and charged it to report back in four weeks.