CBN Targets Major Loan Defaulters, Restricts Access to New Credit Facilities

The Central Bank of Nigeria (CBN) has ordered commercial banks nationwide to bar major loan defaulters, particularly large-ticket borrowers, from accessing new credit facilities and certain banking services.
The directive, outlined in a circular seen on Monday, is part of the apex bank’s ongoing effort to reinforce financial stability and curb systemic risks in Nigeria’s banking sector.

Large-ticket obligors are borrowers—individuals or companies—with significant outstanding loans to banks.
According to the circular, the measure aims to protect the financial system, safeguard depositors, and ensure compliance with prudential banking 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 guidelines, any large-ticket borrower listed in the Credit Risk Management System (CRMS) or in a licensed private credit bureau as having non-performing loans will be ineligible for additional credit. Restricted credit facilities include loans and other forms of direct lending.
Affected borrowers will also be barred from other banking services, including bankers’ confirmations, letters of credit, performance bonds, and advance payment guarantees. Banks have also been instructed to strengthen collateral coverage on existing loans, obtaining additional realizable collateral from defaulting borrowers to minimize potential losses.
Large-ticket obligors are defined under Clause 3.2(d) of the prudential guidelines for deposit money banks as borrowers whose exposure exceeds the Single Obligor Limit, whether at one bank or across multiple institutions as recorded in the CRMS or credit bureau systems.
CBN will monitor compliance closely and warned that non-compliant banks could face sanctions under the Banks and Other Financial Institutions Act 2020.
This directive follows closely on the heels of another CBN order requiring banks to conduct stress tests to bolster resilience against potential economic shocks. Analysts suggest both measures highlight the regulator’s heightened focus on risk management in the banking sector.
The announcement also comes amid the ongoing banking sector recapitalization exercise, launched in 2024, requiring banks to meet revised minimum capital requirements by March 31. Industry sources say about 30 banks have met the new thresholds, with others still completing their recapitalization plans.
Financial experts believe the new CBN directive will tighten lending conditions for borrowers with poor repayment records while encouraging banks to adopt more cautious credit practices.