The Central Bank of Nigeria (CBN) has officially restricted banking services for “chronic defaulters” and large-ticket obligors with non-performing loans.
To ensure credit discipline and protect the country’s financial system, the central bank released a policy statement on Wednesday after comments made by CBN Governor Olayemi Cardoso during the 4th Annual IMF/AFRITAC West 2 High-Level Executive Forum in Abuja.
The governor emphasized that the time of leniency for struggling borrowers has come to an end.
He stressed that the bank is adopting a more proactive approach to corporate governance to safeguard the N4.61tn in new capital recently drawn into the banking sector from systemic exploitation.
“Our stance on corporate governance is unequivocal: zero tolerance for violations. By ending years of regulatory forbearance, we have reinforced accountability, tightened supervision, and elevated compliance standards across the sector,” the governor stated.
The updated directive specifically aims at “large-ticket obligors,” individuals or organizations with substantial overdue debts categorized as non-performing in the Credit Risk Management System. According to the new regulations, these defaulters will be prohibited from obtaining not just new credit but also vital contingent liabilities and trade instruments.
“We have implemented a restriction of banking services to non-performing large-ticket obligors. This decisive step underscores our commitment to credit discipline, financial integrity, and accountability,” the statement read.
The CBN asserts that the initiative aims to establish a “culture of repayment” that has traditionally been absent among prominent borrowers. The regulator seeks to stop “credit jumping,” a tactic where defaulters switch banks to acquire additional debt, by restricting access to tools like letters of credit and performance bonds.
“By curbing access to banking services for chronic defaulters, we are reinforcing the culture of repayment, protecting depositors, and safeguarding the stability of the financial system,” the apex bank added.
Aside from the enforcement against debtors, Cardoso reiterated that the CBN stays strongly dedicated to traditional monetary policy.
This method emphasizes maintaining price stability and utilizing traditional instruments to ground inflation expectations, shifting away from unorthodox measures to rebuild trust in the naira.
“The CBN remains firmly anchored in orthodox monetary policy, focused on restoring price stability, strengthening policy credibility, and anchoring expectations through discipline and consistency,” the statement concluded.
For years, the Nigerian banking industry has faced issues with “chronic defaulters,” affluent individuals or large corporations that take loans in billions and do not pay back.
These are commonly known as “high-value obligors.” When these loans fail, they jeopardize the liquidity of banks and the security of regular citizens’ deposits.
With Cardoso at the helm, the CBN is shifting towards “orthodox monetary policy.” This signifies a shift from large-scale development initiatives and direct lending to areas such as agriculture, prioritizing instead its primary mission: maintaining price stability and regulating the financial system.
