CBN Bars Major Loan Defaulters From Fresh Credit, Tightens Banking Restrictions

Central Bank of Nigeria has directed deposit money banks to deny fresh credit facilities and other banking support services to major loan defaulters whose non-performing loans pose risks to the nation’s financial system.

The directive was contained in a circular issued by the apex bank to commercial banks as part of ongoing efforts to strengthen financial stability, improve prudential compliance, and protect depositors’ funds.

Under the new instruction, borrowers classified as large-ticket obligors with non-performing loan records in the Credit Risk Management System (CRMS) or licensed private credit bureaus will no longer qualify for additional loans or related credit facilities.

The CBN explained that affected customers will also be restricted from accessing contingent banking services such as letters of credit, bankers’ confirmations, performance bonds, and advance payment guarantees.

According to the bank, the measure is aimed at curbing credit abuse and preventing systemic risks within the banking sector.

The circular further directed banks to strengthen collateral coverage by obtaining additional realizable securities from affected obligors in order to secure existing exposures.

A large-ticket obligor, according to the regulator, refers to borrowers whose total exposure exceeds the Single Obligor Limit and whose indebtedness could materially affect a bank’s capital adequacy position.

The apex bank noted that the directive reinforces an earlier 2014 policy prohibiting chronic loan defaulters from further access to credit in the banking system.

It warned that any bank found violating the new rule would face regulatory sanctions in line with provisions of the Banks and Other Financial Institutions Act 2020.

The development comes as Nigerian banks continue recapitalisation efforts ahead of the regulatory deadline fixed for the end of March 2026.