The NIRSAL Microfinance Bank has defended the aggressive method deployed to recover COVID-19 loans granted some Nigerians after beneficiaries of the government-backed stimulus scheme accused the bank of illegal deduction of lump sums of money from their accounts without prior notice.

This came after many recipients of the loan scheme launched by the Central Bank of Nigeria in 2020 to cushion the economic effects of the COVID-19 pandemic on small business owners cried out for help over alleged unexplained NIRSAL-initiated withdrawals from their accounts to offset their debts.

Responding to the Peoples Gazette’s inquiry on Friday, the Managing Director of NIRSAL Microfinance Bank, Abubakar Abdullahi Kure, said that the funds were loans and not grants.

He added that the means which the company chose to retrieve the debts were contained in the contract signed by the recipients during the application.

“Intervention funds were loans, not grants, and this was contained in the electronic offer letter accepted by the obligors, including right of offset via Global Standing Instruction (GSI),” Mr Kure said.

The GSI is a system designed by the CBN that allows creditor banks to automatically recover the principal and accrued interest from any other eligible bank accounts the borrower owns.

Many complained about the bank’s decision to drain the debts at once as opposed to belief that the deduction would be in piecemeal like any other loans. Some also accused the NIRSAL of deducting more than the amount they borrowed while the bank refuses to update their credit statements to show clearing of the debts.

Responding further, Mr Kure denied the claims that the borrowers were not informed by the bank before the deductions.

He stated, “The loan has a schedule of repayment that was not done despite several notifications to defaulters, and hence, the right to activate repayment was activated.”