The Central Bank of Nigeria (CBN) has directed commercial banks to restrict loan defaulters particularly large-ticket obligors from accessing new credit facilities.
In a circular issued to banks, the apex bank said the move aims to strengthen financial stability and prevent systemic risks within the banking sector.
A large-ticket obligor refers to an individual or company that owes a substantial amount to a bank. Under the directive, any borrower with a non-performing loan recorded in the Credit Risk Management System (CRMS) or by licensed private credit bureaus will no longer qualify for additional credit.
According to the CBN, such borrowers must also be denied other banking facilities that involve financial guarantees. These include bankers’ confirmations, letters of credit, performance bonds and advance payment guarantees.
The regulator said the measure aligns with its mandate to maintain a sound financial system and protect depositors.
“In furtherance of its mandate to promote a sound financial system, protect depositors, and enhance prudential compliance within the banking sector, the CBN hereby directs all banks to restrict non-performing large-ticket obligors whose activities pose systemic risk,” the circular stated.
The apex bank also instructed banks to strengthen collateral coverage on existing loans held by such borrowers by obtaining additional realisable assets where necessary.
The directive reinforces an earlier policy issued in June 2014 that prohibited loan defaulters from accessing further credit within the banking system.
The CBN warned that failure to comply will attract sanctions under the provisions of the Banks and Other Financial Institutions Act 2020.
The move comes as Nigerian banks continue preparations for an ongoing recapitalisation programme scheduled to conclude on March 31.
So far, about 30 banks have reportedly met the new minimum capital requirements introduced in March 2024.
