Central Bank of Nigeria (CBN) has directed commercial banks to stop granting new credit facilities to individuals and companies that have defaulted on existing loans within the banking system.
Gatekeepers News reports that the directive, contained in a circular to banks, specifically targets borrowers classified as “large-ticket obligors”—those with substantial outstanding debts that could pose risks to the financial system if left unresolved.
Under the new rule, financial institutions are required to block such defaulters from accessing additional loans or other forms of direct credit until their existing obligations are fully settled. The restriction also covers borrowers whose non-performing loans are recorded in the Credit Risk Management System (CRMS) or reported by licensed private credit bureaus.
Beyond conventional loans, the apex bank directed banks to deny affected borrowers access to several financial instruments tied to credit transactions. These include letters of credit, bankers’ confirmations, performance bonds, and advance payment guarantees, which are commonly used in trade and business financing.
CBN said the measure is designed to prevent defaulters from accumulating further debt within the banking sector and to protect the stability of Nigeria’s financial system. The circular also instructed banks to strengthen risk management by obtaining additional collateral where existing loan exposures remain unsettled.
According to the regulator, the policy reinforces an earlier directive titled “Prohibition of Loan Defaulters from Further Access to Credit Facilities in the Banking System,” first issued in June 2014 to curb repeated borrowing by delinquent debtors.
The apex bank warned that compliance will be closely monitored and that any bank that fails to enforce the directive could face sanctions under the Banks and Other Financial Institutions Act (BOFIA) 2020.
