CBN bars large loan defaulters from new credit, banking guarantees

The Central Bank of Nigeria (CBN) has directed banks to restrict access to certain banking services for large-ticket obligors with non-performing loans, in a move aimed at strengthening prudential compliance and safeguarding the stability of the financial system.

In a circular dated March 12, 2026, and addressed to all banks, the apex bank said the directive was issued in furtherance of its mandate to promote a sound financial system, protect depositors, and curb credit abuse within the banking sector.

The circular, referenced BSD/DIR/CON/LAB/019/003 and signed by Olubukola A. Akinwunmi, director of banking supervision, requires financial institutions to immediately deny additional credit facilities to large borrowers whose loans have been classified as non-performing in the Credit Risk Management System (CRMS) or by any licensed private credit bureau.

Under the directive, affected obligors will not only be barred from new loans but will also be denied other forms of direct credit and contingent banking facilities. These include bankers’ confirmations, letters of credit, performance bonds and advance payment guarantees.

The CBN said the restriction is designed to prevent borrowers with outstanding default exposures from accumulating further liabilities across the banking system, a practice regulators say heightens systemic risk and weakens credit discipline.

Banks were also instructed to strengthen collateral coverage for existing exposures to such obligors by obtaining additional realisable collateral where necessary.

Related News

For the purpose of the directive, the apex bank defined large-ticket obligors as borrowers whose exposures fall within the threshold set under Clause 3.2(d) of the Prudential Guidelines for Deposit Money Banks in Nigeria, 2010. This includes customers with combined exposures across banks that exceed the Single Obligor Limit (SOL) as reflected in the CRMS or in reports from licensed private credit bureaus.

The CBN noted that such exposures could materially affect a bank’s Capital Adequacy Ratio (CAR) or otherwise pose systemic risks to the financial system if left unchecked.

The latest directive reinforces an earlier circular issued on June 30, 2014, titled “Prohibition of Loan Defaulters from Further Access to Credit Facilities in the Banking System,” which sought to prevent borrowers with delinquent loans from obtaining fresh credit from other banks.

According to the regulator, the renewed measure is intended to ensure greater consistency and effectiveness in curbing credit abuse among large-ticket borrowers.

The Central Bank said it will closely monitor compliance with the directive across the banking industry, warning that any institution found in breach will face regulatory sanctions in line with the provisions of the Banks and Other Financial Institutions Act (BOFIA) 2020.

“Please be guided accordingly,” the circular stated.

Hope Moses-Ashike

Hope Moses-Ashike is an Associate Editor, Banking and Finance, with more than a decade of experience reporting on Nigeria’s financial system and broader economy. She closely tracks market movements, monetary policy decisions, company disclosures, regulatory actions, economic indicators, and global developments, and interprets what they mean for businesses, investors, policymakers, and households. Her reporting helps readers understand complex issues such as inflation trends, foreign exchange market dynamics, interest rate decisions, bank performance, and investment risks. She also covers major international events and periodically travels to Washington, D.C., to report on the World Bank/IMF Spring and Annual Meetings. Her dedication to financial journalism has earned her multiple recognitions and invitations to high-level professional development programmes. She is an alumna of the International Visitors Leadership Programme (IVLP) in the United States and holds an Advanced Financial Journalism Certificate from the Press Association Training in London, UK. Her other notable achievements include completing the Lagos Business School CMC Programme, the Bloomberg Media Africa Initiative Programme, and a Master Class in Journalism at Rhodes University in South Africa.