CBN bars Banks from extending credit to large-scale loan defaulters

In a move aimed at strengthening financial stability, the Central Bank of Nigeria (CBN) has directed banks and other financial institutions to restrict services to large-ticket loan defaulters.

In a circular dated March 12, 2026, signed by the Director of Banking Supervision, Olubukola Akinwunmi, the apex bank instructed all financial institutions to deny additional credit facilities to major obligors whose existing loans have become non-performing.

Titled “Restriction of Banking Services to Non-Performing Large Ticket Obligors,” the directive is part of the CBN’s broader mandate to protect depositors and ensure prudential compliance across the industry.

The new policy stipulates that any borrower with a non-performing facility recorded in the Credit Risk Management System (CRMS) or the database of any licensed private credit bureau is immediately ineligible for new credit.

The CBN clarified that this restriction is comprehensive, covering direct loans as well as contingent liabilities such as letters of credit, bankers’ confirmations, performance bonds, and advance payment guarantees.

To further mitigate risk, the apex bank has ordered financial institutions to strengthen collateral coverage for these specific obligors by securing additional realisable assets to back existing exposures.

Under the directive, large-ticket obligors refers to borrowers whose credit exposure meets the thresholds defined in the 2010 Prudential Guidelines or those whose combined debt across the banking sector exceeds the Single Obligor Limit (SOL).

The CBN noted that such massive exposures pose systemic risks and could materially degrade a bank’s Capital Adequacy Ratio (CAR).

This renewed enforcement reinforces previous regulatory measures, specifically the June 2014 prohibition of loan defaulters from accessing further credit.

By tightening these screws, the regulator aims to address persistent credit abuse by high-net-worth borrowers and ensure greater consistency in debt recovery.

The CBN further warned that it will maintain a high level of surveillance to ensure industry-wide compliance.

"Any financial institution found in breach of these instructions will face stiff regulatory sanctions in accordance with the Banks and Other Financial Institutions Act (BOFIA) 2020," the notice read.