The Central Bank of Nigeria (CBN) has barred individuals and companies that have defaulted on existing bank loans from accessing new credit facilities.
According to the apex bank, all financial institutions have been directed to deny further lending to such borrowers until their debts are fully settled. The move effectively shuts the door on additional credit for borrowers listed as defaulters in the banking system, reinforcing tighter scrutiny of loan exposures.
In a circular issued to deposit money banks, the regulator said the measure is necessary to strengthen financial discipline and prevent risks associated with repeated borrowing by customers who fail to honor previous obligations.
Under the directive, any borrower whose unpaid loans appear in the Credit Risk Management System or are recorded by licensed credit bureaus must not be granted further credit by any financial institution.
“Banks must ensure that obligors with non-performing large exposures are prevented from accessing additional credit until their outstanding liabilities are fully resolved,” the circular stated.
The restriction also applies to several contingent banking services commonly used by corporate borrowers. Banks have been instructed to withhold instruments such as letters of credit, advance payment guarantees, performance bonds, and bankers’ confirmations from customers classified as defaulters.
The CBN explained that the policy aims to shield the financial system from systemic risks that could arise if borrowers with significant unpaid obligations continue to obtain fresh credit.
“Institutions are required to strengthen existing risk controls and ensure that borrowers with unresolved obligations do not gain further access to credit or credit-related services,” the regulator added.
Lenders have also been directed to review collateral arrangements linked to existing facilities. Where necessary, banks are expected to secure additional assets capable of covering outstanding loan exposures.
Under current prudential guidelines, large-ticket obligors are borrowers whose debts exceed the Single Obligor Limit or whose combined borrowings across multiple banks are substantial enough to affect a lender’s capital position.
The CBN said the directive reinforces earlier efforts to prevent chronic loan defaulters from repeatedly accessing financing within the banking system.
“Strict compliance with this directive is mandatory,” the central bank warned, adding that banks in violation could face penalties under the Banks and Other Financial Institutions Act 2020.
The directive comes as Nigerian banks continue adjusting to an ongoing recapitalisation programme introduced by the CBN to strengthen the resilience of the country’s financial sector.
The programme, announced in 2024, requires lenders to meet new minimum capital thresholds ahead of the March 31 deadline set by the regulator.
