Zeeh Africa, a Nigerian-based fintech company with an open banking system, has unveiled its loan recovery solution that leverages the Global Standing Instruction (GSI) technology. The system, according to the company, will enable lenders to recover funds automatically and directly. The technology also has the potential to be used for recurring payment collection.
The company claims that the GSI technology will act as a remedy to the issue of loan repayment, serving as a powerful last-resort tool for lenders both in Nigeria and elsewhere. It will give them the power to directly debit the accounts of loan defaulters in different banks.
Zeeh Africa was established in 2022 by founders Frank Uwajeh and CEO David Adeleke with the goal of helping individuals, businesses, and financial institutions have access to financial data and insights. The new loan recovery solution is the latest addition to the company’s range of services and solutions.
Following the introduction of the new loan recovery solution, CEO David Adeleke expressed confidence that the system will aid in reducing the rates of non-performing loans.
The solution incorporates a “Direct Debit” feature that allows borrowers to authorize the debiting of funds from their main bank account. If there are any complications during the payment process, such as a lack of debit or only partial debit, the system puts the GSI feature into operation. This ensures that the payment is completed, thereby minimizing issues associated with loan recovery.
Zeeh elaborated on how the GSI-based solution can benefit businesses. With the tool, businesses are given control features that allow them to start, pause, or halt ongoing debits in real time. The solution not only provides transparency and flexibility, but it also automates processes, thereby fostering user engagement. Ultimately, the GSI solution has the potential to optimize business processes by providing efficient control and adaptability in managing financial transactions.
Before borrowers can utilise the system, they will be required to authorise the process using their Bank Verification Number (BVN), which serves as a unique identification number for their bank accounts. Additionally, it is essential for borrowers to connect all their bank accounts to the system. This step ensures the system can access their financial information comprehensively, enabling it to address any payment issues and recover payments more efficiently. This extensive financial visibility aids in the swift and effective resolution of business transactions and loan recovery processes.
In July 2020, the Central Bank of Nigeria (CBN) released the Guidelines on Global Standing Instruction (GSI) for individuals. The initiative was aimed at enhancing the country’s financial systems and improving loan recovery rates. The GSI tool is used to cover outstanding principal and interest by recouping overdue payments, excluding penalties, from borrower’s bank accounts.
According to a report by the CBN in 2022, effective mechanisms like the GSI contributed to a reduction in the average non-performing loan ratio, which dropped from 4.9 to 4.2. This indicates that such strategies are viable in managing loan recovery and enhancing the efficiency of financial systems.
