ABUJA: Central Bank of Nigeria (CBN) has issued a new directive preventing large borrowers with outstanding non-performing loans from accessing additional credit facilities and certain banking guarantees across the Nigerian banking system.
The measure, announced in a circular dated March 12, 2026, forms part of the apex bank’s efforts to strengthen financial discipline within the banking sector and safeguard the stability of the country’s financial system.
Signed by Olubukola A. Akinwunmi, Director of Banking Supervision at the CBN, the circular was addressed to all deposit money banks and instructed them to immediately enforce the restrictions on borrowers identified as large-ticket obligors with non-performing loans.
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Under the new rule, banks must deny additional loans and other credit-related services to such borrowers if their loans have been classified as non-performing within the Credit Risk Management System (CRMS) or reported by any licensed private credit bureau.
The directive goes beyond traditional loan restrictions, extending the prohibition to a wide range of contingent banking services.
These include bankers’ confirmations, letters of credit, performance bonds, and advance payment guarantee, facilities often used by companies to secure contracts or conduct international trade.
According to the apex bank, the policy is designed to stop borrowers with existing default exposures from accumulating further liabilities across multiple banks, a practice regulators say increases systemic risk and weakens credit discipline within the financial sector.
The CBN also instructed banks to reinforce their risk management practices by improving collateral coverage for existing loans linked to affected obligors.
Financial institutions were advised to obtain additional realizable collateral where necessary to protect their exposures.
For clarity, the regulator defined large-ticket obligors as borrowers whose total credit exposure across banks exceeds limits outlined under Clause 3.2(d) of the Prudential Guidelines for Deposit Money Banks issued in 2010.
These borrowers typically have combined exposures above the Single Obligor Limit reported through the CRMS or private credit bureau systems.
The apex bank warned that such large exposures could significantly impact a bank’s Capital Adequacy Ratio (CAR) or pose broader systemic risks if not properly managed.
The directive also reinforces an earlier circular issued on June 30, 2014, which barred loan defaulters from obtaining fresh credit from other financial institutions within the banking system.
By strengthening the enforcement of this rule, the CBN aims to ensure greater compliance and prevent abuse of credit facilities by large borrowers.
Regulators say the renewed measure is part of ongoing efforts to enhance transparency, strengthen credit monitoring, and protect depositors’ funds.
The central bank further stated that compliance with the directive will be closely monitored across the banking industry.
Any financial institution found violating the rule may face regulatory penalties under provisions of the Banks and Other Financial Institutions Act.
The circular concluded with a reminder to banks to strictly adhere to the new guidelines as part of broader regulatory reforms aimed at maintaining stability within Nigeria’s financial system.
