The ongoing bank verification number (BVN) enrolment will enhance access to credit to small and medium scale enterprises (SMEs) as well as enhance the credit score of bank customers in Nigeria.
The Group Managing Director and Chief Executive Officer of Fidelity Bank Plc, Mr. Nnamdi Okonkwo, disclosed this at the weekend while speaking to journalists on BVN.
The BVN project is an initiative aimed at protecting bank customers and further strengthening the Nigerian banking system. It is an inventiveness of the Central Bank of Nigeria (CBN), in conjunction with the Bankers’ Committee. The BVN is a number that enables a bank customer to have a single identity in the banking system.
A credit score is primarily based on credit report information typically sourced from credit bureaus. Lenders use credit scores to determine who qualifies for a loan, among others.
There are about 17 million registered SMEs in Nigeria today. In most countries, SMEs account for up to 70 per cent or more of businesses, yet in developing economies such as Nigeria, SMEs suffer from lack of access to finance.
The Fidelity Bank boss explained: “In more developed parts of the world, they have credit rating systems and social identification system. For example, if I am Nnamdi Okonkwo, there might be other 1,000 Nnamdi Okonkwos, but each Nnamdi Okonkwo has a unique number assigned by his country such that whenever you put that number in, everything about that person comes out. We are gradually getting to that.
“Until we get there, credit scoring system is still a challenge. Therefore, it is possible that this same Nnamdi Okonkwo can go to a bank, take a loan and default, move to another bank, still take a loan and default and nobody sees that his credit history is bad. But with what the CBN has done with the BVN, that will be taken care of. That is why I am advising everybody to go and register and get your BVN.
“When each of us have our BVN, which is tied to our thump, if I need to lend money to you, I can check. If the person is a notorious debtor in other banks, then he doesn’t get a loan from me and that protects all of us because the bank does not own all the money.M ost of the monies that banks use to do business belong to depositors. So, whatever initiative the CBN is taking, is to protect depositors and the larger economy.
“The BVN is a unique number that every account holder in Nigeria should have, going forward. So, with your thumb registered, wherever you go, you can confirm that it is you. It is for security, it is for KYC. Like you know, for you to borrow from any bank now, you must have your BVN. It helps our credit scoring system.