The Circular. The Circular gives banks, who have extended facilities to customers, the right to access and utilise deposits of the NPL’s customer across the banking industry in the event of a payment default. As such, a bank loan can be repaid, upon default on repayment of either the principal or interest or both, with funds in any bank account belonging to the customer. A bank can exercise this right by reporting the defaulting loan and customer to the CBN, who would in turn direct other banks and financial institutions it regulates to pay over and set off the outstanding indebtedness with bank deposits and financial assets in the name of the defaulting customer. The Circular also provides for the template clause to be included in loan agreements effective from 26 August 2019 as follows:
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Sources: Loan Agreement