The Central Bank of Nigeria (CBN) has ordered banks to deny additional loans and certain banking services to large borrowers with non-performing loans as part of efforts to strengthen credit discipline and protect financial stability.
CBN Restricts Banking Services for Large Borrowers with Non-Performing Loans
The Central Bank of Nigeria (CBN) has instructed commercial banks to limit access to certain banking services for major borrowers who have defaulted on their loan obligations. The move is part of broader efforts to protect the stability of Nigeria’s financial system and enforce stronger credit discipline among borrowers.
The directive was issued in a circular dated March 12, 2026, and addressed to all financial institutions. It was signed by Olubukola Akinwunmi, Director of Banking Supervision at the apex bank.
Defaulting Borrowers to Lose Access to New Credit
According to the CBN, borrowers whose loan facilities are classified as non-performing and recorded in the Credit Risk Management System (CRMS) or by any licensed private credit bureau will no longer qualify for new credit facilities.
The apex bank explained that the restriction takes effect immediately and applies to all deposit money banks and financial institutions.
Under the directive, banks must refuse additional lending to affected borrowers. This includes loans and other forms of direct credit.
The policy also extends beyond lending. The CBN stated that such borrowers should not be granted several banking services that could create financial obligations for banks.
These include:
- Bankers’ confirmations
- Letters of credit
- Performance bonds
- Advance payment guarantees
The central bank emphasized that the restrictions apply to large-ticket obligors, as defined under Clause 3.2(d) of the Prudential Guidelines for Deposit Money Banks.
Banks Required to Secure Existing Loans
In addition to restricting access to new credit, banks have been directed to request additional realizable collateral from affected borrowers. This measure is intended to ensure that existing loan exposures are properly secured.
The CBN clarified that large-ticket obligors refer to borrowers whose combined credit exposure across multiple banks exceeds the Single Obligor Limit. These borrowers may also be classified as such if their obligations significantly impact a bank’s Capital Adequacy Ratio or pose broader risks to the banking sector.
To determine borrower exposure levels, banks must rely on data available in the CRMS as well as information obtained from licensed private credit bureaus.
Similar Policy Introduced in 2024
This directive reinforces earlier regulatory actions by the CBN aimed at reducing loan defaults.
In June 2024, the apex bank issued a similar order preventing loan defaulters from obtaining additional credit within the banking system. The latest policy further strengthens those earlier efforts to curb credit abuse and improve loan repayment culture among borrowers.
The regulator stated that it will closely monitor compliance with the directive across the banking industry. Financial institutions that fail to comply risk regulatory sanctions under the Banks and Other Financial Institutions Act (BOFIA) 2020.
Rising Bad Loans in Nigeria’s Banking Sector
The new directive comes at a time when Nigeria’s banking sector is experiencing a rise in non-performing loans (NPLs).
Industry data shows that the NPL ratio climbed to approximately 7% in 2025, exceeding the regulatory benchmark of 5% set by the CBN.
The increase followed the end of regulatory relief measures introduced during the COVID-19 pandemic. Under the temporary forbearance, banks were allowed to restructure affected loans without immediately classifying them as non-performing.
Once that relief window expired, many previously restructured loans were reclassified, contributing to the recent surge in bad loans across the banking industry.
The CBN believes that stricter lending controls and tighter monitoring of large borrowers will help reduce credit risk and strengthen the overall resilience of Nigeria’s banking system.