Do you own more than one bank account in Nigeria? Do you intend to apply for loan facilities from Banks? If so, this newsletter is for you.

At the 345th Bankers Committee meeting held on the 26th of August 2019 in Lagos State where Bankers, the Central Bank of Nigeria (“CBN”), and other regulators in the banking industry converged, the BVN 2.0 Initiative was introduced. We have highlighted in this newsletter salient details on the BVN 2.0 Initiative.

Bank Verification Number (“BVN”) is an initiative of the CBN launched on the 14th of February 2014, as a centralized biometric identification system, which gives a unique identity to bank customers that can be verified across the Nigerian banking industry.

The BVN 2.0 however, is an improvement of this initiative which seeks to unify the system of debt recovery across banks within the Nigerian banking industry. This will provide lenders the right to apply assets owned by defaulters in other financial institutions towards the liquidation of their debts. This right will now be catered for by introduction of set-off provisions in offer letters issued to borrowers

The BVN 2.0 will apply to:

❑ all banks in Nigeria including microfinance banks, finance companies, mortgage banks and investment banks; and

❑ All borrowers with major beneficiaries being in the small-to-medium enterprise and retail sectors.

It will apply to loan and debt recovery transactions with financial institutions.

❑ Promote Banks’ Lending Confidence: This initiative will encourage banks to lend more as there is a system in place that will guarantee the recovery of loans from other recognised assets;
❑ Reduces the rate of loan defaults: The system of debt recovery through other deposit accounts held by a borrower willreduce therate of loan defaults.
❑ Economic Growth: This initiative will immensely impact on the national level of nonperforming loans of banks in Nigeria.