CBN Moves Against Loan Defaulters, Orders Banks To Restrict Services

The Central Bank of Nigeria (CBN) has ordered banks to deny certain banking services to borrowers with large non-performing loans, in a move aimed at strengthening credit discipline and protecting the stability of the financial system.

In a circular dated March 12, 2026, and signed by the Director of Banking Supervision, Olubukola Akinwunmi, the apex bank instructed financial institutions to take immediate steps to limit further financial access for customers whose loan facilities have already gone bad.

Under the new directive, any borrower classified as having a non-performing loan and listed in the Credit Risk Management System (CRMS) or in the records of licensed private credit bureaus will be barred from accessing additional credit from banks.

The CBN explained that the measure specifically targets large-ticket borrowers whose defaulted loans could pose significant risks to banks and potentially threaten the wider financial system.

The circular stated that banks must immediately stop granting new credit facilities to such borrowers. The restriction covers all forms of direct credit, including loans and similar financing arrangements.

In addition to loans, the apex bank said affected borrowers should also be denied other banking services that create financial obligations for banks. These include contingent liabilities such as letters of credit, bankers’ confirmations, performance bonds and advance payment guarantees.

According to the regulator, the restrictions will apply to borrowers whose credit exposures fall within the definition of “large-ticket obligors” as stated in Clause 3.2(d) of the Prudential Guidelines for Deposit Money Banks.

The CBN further directed banks to strengthen their risk management by demanding additional collateral from the affected borrowers in order to adequately secure their existing loan exposures.

The apex bank explained that large-ticket obligors refer to borrowers whose total exposure across the banking system exceeds the Single Obligor Limit. Such exposures are considered significant because they can materially affect a bank’s Capital Adequacy Ratio or create systemic risks for the financial sector.

To enforce the directive, banks are expected to rely on credit information available in the CRMS as well as data obtained from licensed private credit bureaus when determining the status and exposure levels of borrowers.

The new policy comes amid concerns about rising bad loans in the banking sector. Recent macroeconomic data released by the CBN indicates that the industry’s Non-Performing Loan (NPL) ratio has climbed to about seven per cent.

This figure exceeds the regulatory threshold of five per cent considered acceptable for maintaining banking sector stability.

The CBN attributed the increase largely to the expiration of regulatory reliefs previously granted on restructured loans. Once the relief window closed, several of those loans were reclassified as non-performing, pushing up the industry’s bad loan ratio.

The regulator believes the new restrictions will help curb further deterioration in asset quality while encouraging borrowers to meet their repayment obligations.