The Central Bank of Nigeria CBN has directed commercial banks to block loan defaulters, particularly large-ticket borrowers, from accessing new credit facilities. The directive, issued in a circular seen by Vanguard on Friday, targets individuals and companies whose outstanding loans pose systemic risks to the financial system.
Large-ticket obligors are defined as borrowers whose combined exposures exceed the Single Obligor Limit SOL and materially affect a bank’s Capital Adequacy Ratio CAR. The CBN clarified that such borrowers with non-performing loans recorded in the Credit Risk Management System CRMS or by licensed private credit bureaus must be restricted from obtaining additional loans, letters of credit, performance bonds, bankers’ confirmations, and advance payment guarantees.
The central bank also instructed banks to strengthen collateral coverage for existing exposures by obtaining additional realizable collateral from affected borrowers. The regulator emphasized that compliance will be closely monitored, with sanctions enforced under the Banks and Other Financial Institutions Act BOFIA 2020 for non-compliant institutions.
This move aligns with the CBN’s efforts to safeguard the financial system, protect depositors, and curb credit abuse by large-ticket obligors.
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