The Central Bank of Liberia (CBL) has given all non-compliant delinquent borrowers up to the end of the first quarter of 2023 to settle or restructure their outstanding obligations to the commercial banks.
According to the CBL’s directives, those who fail to comply, will be subjected to stringent supervisory actions, including but not limited to restriction from accessing banking services in keeping with CBL’s directive regarding non-compliant delinquent borrowers.
The CBL reiterates that it will impose the appropriate penalties against commercial banks that fail to adhere to this directive and the Bank’s Directive # CBL/RSD/DIR/002/2017, which bars commercial banks and other regulated financial institutions from providing financial services to delinquent borrowers that fail to resolve their delinquent status.
The bank’s attention was drawn to the high level of non-performing loans (NPLs) in the banking system of Liberia as a result of the actions of non-compliant delinquent borrowers which is a violation of the bank’s directive and regulation.
The CBL said it is strongly concerned about the persistent failure of non-compliant delinquent businesses and individuals to settle their loan obligations to the commercial banks, despite having the capacity and ability to do so.
“This situation is not only adversely impacting the viability of the banking system, but also amounts to the misuse of depositors’ funds and poses significant risk to public resources in terms of protection of the system,” the CBL stated in its directive.
In light of this development and considering the ramification of the actions of these non-compliant delinquent borrowers, commercial banks are required to take appropriate actions and/or measures to reform their internal procedures and processes to improve their loan recovery processes, including administrative measures to hold accountable staff for poor underwriting standards and practices.
Meanwhile, the Regulation and Supervision Department has been directed to work with the Liberia Bankers Association (LBA) to develop a comprehensive loan recovery strategy to address the NPL situation in the banking system.
The CBL assures the public of its commitment to ensuring the viability of the banking system and protection of depositors’ and public’s funds.