The Central Bank of Nigeria (CBN) has ordered commercial banks to stop granting new loans and certain banking services to large borrowers who have failed to repay their existing debts.
The directive, issued in a circular to banks and seen by TheCable, specifically targets “large-ticket obligors,” a term used for individuals or companies that owe very large sums of money to financial institutions.
According to the apex bank, borrowers who already have non-performing loans recorded in the Credit Risk Management System (CRMS) or in reports from licensed private credit bureaus must no longer be given additional credit facilities.
“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.
The regulator explained that the restriction is aimed at preventing borrowers who have already defaulted on large loans from accumulating more debt within the banking system.
It also instructed banks to deny such borrowers several other financial services tied to credit transactions.
“Any large-ticket obligor with a non-performing facility recorded in the CRMS and/or any licensed private credit bureau shall not be granted additional credit facilities,” the CBN said.
“For the purpose of this restriction, credit facilities include loans and other forms of direct credit.”
Beyond loans, the directive also blocks defaulting large borrowers from accessing banking instruments commonly used for business transactions and financial guarantees.
“In addition, such obligors shall not be granted banking facilities or contingent liabilities such as bankers’ confirmations, letters of credit, performance bonds, or advance payment guarantees,” the circular added.
The CBN further directed banks to strengthen their existing loan exposure to such borrowers by securing more collateral where necessary.
This means financial institutions must obtain additional realisable assets from defaulters to better protect outstanding loans already issued to them.
The apex bank explained that large-ticket obligors include borrowers whose exposure levels exceed the Single Obligor Limit (SOL) or those whose combined debts across multiple banks significantly affect a bank’s Capital Adequacy Ratio (CAR) or pose broader risks to the financial system.
According to the circular, the move reinforces earlier regulatory actions designed to curb repeated borrowing by defaulters.
“This directive reinforces earlier measures, particularly the circular titled ‘Prohibition of Loan Defaulters from Further Access to Credit Facilities in the Banking System’ issued on June 30, 2014,” the CBN noted.
“This is to ensure consistency and effectiveness in curbing credit abuse by large-ticket obligors.”
The regulator also warned banks to comply strictly with the directive, stating that it will monitor implementation across the industry.
It added that any financial institution that fails to enforce the restriction will face regulatory sanctions under the provisions of the Banks and Other Financial Institutions Act (BOFIA) 2020.
