By Joy Yesufu
The Central Bank of Nigeria has directed commercial banks across the country to restrict loan defaulters, particularly large-ticket obligors, from accessing new credit facilities and other banking services.
The directive was contained in a circular issued to banks and seen on Monday as part of the apex bank’s efforts to strengthen financial stability and reduce systemic risks within Nigeria’s banking sector.
A large-ticket obligor refers to a borrower—either an individual or corporate entity—that owes a significantly large amount of money to a bank.
According to the circular, the move is aimed at safeguarding the country’s financial system, protecting depositors, and ensuring greater compliance with prudential regulations.
“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 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.
Under the new directive, any large-ticket borrower with a non-performing loan recorded in the Credit Risk Management System (CRMS) or in the records of any licensed private credit bureau will not be eligible to obtain additional credit facilities from banks.
The CBN explained that such credit facilities include loans and other forms of direct lending.
In addition, affected borrowers will also be barred from accessing other banking services such as bankers’ confirmations, letters of credit, performance bonds and advance payment guarantees.
The apex bank also instructed financial institutions to strengthen the collateral coverage of existing loans held by such borrowers.
Banks are therefore required to obtain additional realisable collateral from defaulting obligors to secure outstanding exposures and minimise potential losses.
The regulator explained that large-ticket obligors are defined under Clause 3.2(d) of the prudential guidelines for deposit money banks as customers whose borrowing exposure exceeds the Single Obligor Limit, either within one bank or across several banks as captured in the Credit Risk Management System or credit bureau records.
The CBN said it would closely monitor compliance with the directive to ensure uniform implementation across the banking industry.
It warned that banks that fail to comply with the new guidelines risk facing regulatory sanctions in line with provisions of the Banks and Other Financial Institutions Act 2020.
The directive comes less than a week after the apex bank asked financial institutions to conduct stress tests as part of efforts to strengthen their resilience against potential economic shocks.
While it remains unclear whether both directives are directly connected, analysts believe the measures reflect the regulator’s increasing focus on strengthening risk management practices within the banking sector.
The development is also occurring amidst an ongoing banking sector recapitalisation exercise introduced by the CBN in 2024.
Under the programme, Nigerian banks are expected to meet new minimum capital requirements before the March 31 deadline set by the regulator.
Industry sources indicate that about 30 banks have already met the revised capital threshold, with others working to complete their recapitalisation plans.
Financial experts say the latest directive is likely to tighten lending conditions for borrowers with poor repayment histories while encouraging banks to adopt more cautious credit practices.
