The Central Bank of Nigeria (CBN) has directed commercial banks across the country to deny additional credit facilities to major borrowers who have defaulted on existing loan obligations.
The new directive was communicated through an official circular issued to financial institutions, according to reports monitored by Naija News.
The apex bank explained that the measure is part of broader efforts to strengthen financial stability, safeguard depositors’ funds, and enforce stricter compliance with banking regulations within Nigeria’s financial system.
Under the directive, borrowers classified as large-ticket obligors with non-performing loans recorded in the Credit Risk Management System (CRMS) or any licensed private credit bureau will be barred from obtaining fresh credit from banks.
The restriction covers various forms of credit facilities, including loans and other direct lending arrangements.
Risk Exposure
In addition, banks have been instructed not to provide such borrowers with other banking support instruments such as banker’s confirmations, letters of credit, performance bonds, or advance payment guarantees.
To further limit risk exposure within the banking sector, the CBN also mandated financial institutions to demand additional realizable collateral from affected borrowers in order to adequately secure any outstanding credit already granted.
The circular defines large-ticket obligors as borrowers whose credit exposures meet the criteria outlined in Clause 3.2(d) of the 2010 Prudential Guidelines for Deposit Money Banks in Nigeria.
This includes customers whose combined borrowing across multiple banks exceeds the Single Obligor Limit (SOL), as captured in the CRMS or credit bureau reports.
Systemic Ratio
According to the apex bank, such exposures could significantly impact a bank’s Capital Adequacy Ratio (CAR) or pose a potential systemic risk to the overall financial system.
The latest directive also reinforces an earlier policy issued on June 30, 2014, titled “Prohibition of Loan Defaulters from Further Access to Credit Facilities in the Banking System.”
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The CBN noted that the renewed enforcement is aimed at ensuring greater discipline in loan repayment and preventing the abuse of credit by large-scale borrowers.