By Ayo Kehinde
The Central Bank of Nigeria (CBN) has directed banks to deny certain banking services and additional credit facilities to borrowers with non-performing loans, in a move to strengthen credit discipline across the financial system.
In a circular signed by the Director of Banking Supervision, Olubukola Akinwunmi, the apex bank instructed all deposit money banks to immediately restrict access to further lending for large borrowers whose loan facilities have been classified as non-performing.
Under the directive, any borrower whose loan is recorded as non-performing in the Credit Risk Management System (CRMS) or flagged by licenced private credit bureaus will be ineligible for additional credit from banks.
The restriction extends beyond direct lending. Affected borrowers will also be denied access to contingent banking facilities commonly used in commercial transactions, including letters of credit, bankers’ confirmations, performance bonds and advance payment guarantees.
The CBN said the measure targets “large-ticket obligors” borrowers whose combined exposure across banks exceeds the Single Obligor Limit or whose financial obligations could significantly affect a bank’s capital adequacy and pose systemic risks to the financial system.
Banks have also been directed to obtain additional realisable collateral from such borrowers to adequately secure existing loan exposures.
According to the regulator, the move is part of broader efforts to safeguard financial stability, curb credit abuse and protect depositors as concerns persist over rising non-performing loans in the banking sector.
