A Lagos high court ruling puts Nigeria’s automated loan recovery process on trial
The GSI was built to kill bad loans, but is it killing due diligence? A Lagos High Court awarded ₦2m to a student in a loan recovery case against Fidelity Bank. Here's what it tells us about the CBN's GSI framework.
In July 2020, the Central Bank of Nigeria released operational guidelines on the Global Standing Instruction. The GSI framework, designed to reduce non-performing loans, empowers commercial banks to trigger a recovery process for overdue loans.
But a ruling at a Lagos High Court this month puts the GSI’s application in sharp focus.
On Thursday, February 12, 2026, a High Court in Lagos State, Nigeria, ruled against Fidelity Bank in a civil suit filed by Esther Agboola. In the suit filed in April 2025, Agboola alleged that Fidelity Bank breached her fundamental right to data privacy by processing her account details to offset an unverified loan.
A student at the time, Agboola, reported that she had saved money for her upkeep with the bank, only to notice that her account balance of ₦11,922.41 had been depleted by an ‘unauthorised’ debit. Upon inquiry, Fidelity’s customer care informed her that the debit was due to an automatic loan recovery process.
However, Agboola maintained that she had never obtained a loan from the financial institution in question. Despite her protests, the bank declined to refund the amount debited, forcing her to file a lawsuit.
Fidelity Bank’s defence
In its defence, Fidelity Bank’s legal counsel, David Etim, argued that the institution acted in accordance with applicable banking laws and regulations. Under the GSI framework, commercial banks are empowered to recover overdue loans by automatically debiting any account linked to a defaulter’s Bank Verification Number (BVN).
However, the regulation only permits the recovery of the principal and accrued interest. Any outstanding fees arising from a default cannot be retrieved using the GSI. In this case, Fidelity Bank stated that they received a GSI trigger via the Nigeria Inter-Bank Settlement System (NIBSS), indicating an outstanding debt to NIRSAL Microfinance Bank.
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