The Central Bank of Nigeria has directed commercial banks across the country to deny loan defaulters access to new credit facilities, particularly borrowers with large outstanding debts.
In a circular issued to financial institutions, the apex bank instructed lenders not to grant fresh loans or other banking facilities to any borrower whose non-performing loans are recorded in the Credit Risk Management System or listed with licensed private credit bureaus.
The directive targets large-ticket borrowers, a category that includes individuals and companies owing substantial amounts to banks. Under the new rule, affected borrowers will not only be blocked from obtaining new loans but will also be denied access to key banking instruments such as letters of credit, performance bonds and advance payment guarantees.
The Central Bank also directed banks to obtain additional collateral from such borrowers in order to secure existing loan exposures and reduce risks within the financial system.
According to the regulator, the measure is designed to strengthen Nigeria’s banking sector by improving credit discipline, protecting depositors’ funds and ensuring strict compliance with credit risk management guidelines previously issued by the apex bank.
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The CBN warned that any financial institution that fails to comply with the directive would face sanctions under the provisions of the Banks and Other Financial Institutions Act 2020.
The development comes at a time when Nigerian banks are undergoing a major recapitalisation programme introduced by the Central Bank to strengthen the financial system and improve the capacity of banks to support economic growth.
The recapitalisation exercise, which is expected to conclude by March 31, has already seen about 30 banks meet the new minimum capital requirements set by the regulator.
Financial analysts say the latest directive is part of broader efforts by the Central Bank to reduce the level of non-performing loans in the banking sector and enforce stricter credit risk management across financial institutions.
