The Central Bank of Nigeria (CBN) has directed commercial banks across the country to block loan defaulters, particularly large-ticket borrowers, from accessing new credit facilities within the banking system.
The directive was contained in a circular issued to banks on Friday as part of the apex bank’s efforts to strengthen financial stability and reduce systemic risks within the banking sector.
According to the circular, any large-ticket obligor with a non-performing loan recorded in the Credit Risk Management System (CRMS) or any licensed private credit bureau will no longer be eligible to obtain additional credit facilities from banks.
The CBN explained that the restriction covers loans and other forms of direct credit, as well as banking facilities and contingent liabilities such as bankers’ confirmations, letters of credit, performance bonds, and advance payment guarantees.
“In furtherance of its mandate to promote a sound financial system, protect depositors, and enhance prudential compliance within the banking sector, the Central Bank of Nigeria (CBN) hereby directs all banks to restrict non-performing large-ticket obligors, whose activities pose systemic risk to the financial system, from accessing specified banking services,” the circular stated in part.
The apex bank also instructed financial institutions to strengthen collateral coverage for existing exposures by obtaining additional realisable collateral from affected borrowers.
It clarified that large-ticket obligors refer to borrowers whose exposures fall under Clause 3.2(d) of the prudential guidelines for deposit money banks in Nigeria (2010). The category also includes customers whose combined exposures across banks, as recorded in the CRMS or by licensed credit bureaus, exceed the Single Obligor Limit (SOL) and could significantly affect a bank’s Capital Adequacy Ratio (CAR) or pose systemic risk to the financial system.
The directive reinforces an earlier circular issued on June 30, 2014, which prohibited loan defaulters from further access to credit facilities within the banking system.
The CBN said the measure is aimed at ensuring consistency and strengthening efforts to curb credit abuse by large-ticket borrowers.
The regulator also warned that banks that fail to comply with the directive will face sanctions in line with the provisions of the Banks and Other Financial Institutions Act (BOFIA) 2020.
The latest instruction comes less than a week after the CBN directed financial institutions to conduct stress tests as part of broader measures to safeguard the stability of Nigeria’s financial system.
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