A Bill for an Act to assist banks recover bad debts, scaled 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 as well as provide penalties for breaches.
He said that the essence was to enhance loan recovery in the Nigerian banking sector.
He said that the legislation had become necessary because credit was seen as the lifewire of the banking business and the current situation in Nigeria demanded an injection of a healthy bank credit and recovery system that would effectively fasten 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 ability of our banks to recover loans has been the factor behind the collapse of many commercial banks.
“Today, the situation in Nigeria has become very serious and seemingly intractable and thereby frustrating our efforts as a nation towards 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 plenary, referred the bill to the Senate Committee on Banking, Insurance and Financial Institutions for further legislative works to report back in four weeks.