The Central Bank of Nigeria (CBN) has issued a directive to deposit money banks to tighten restrictions on borrowers who fail to repay their loans, in a move aimed at strengthening credit discipline and safeguarding the stability of the country’s financial system.
Under the new directive, banks have been instructed to deny fresh credit facilities to individuals and companies listed as loan defaulters in the banking system. The apex bank said the measure is designed to curb the rising cases of non-performing loans and ensure that borrowers meet their repayment obligations.
According to the directive, financial institutions must verify the credit status of customers through the Credit Risk Management System (CRMS) and other licensed credit bureaus before approving new loans or financial guarantees. Borrowers with outstanding non-performing loans will not be eligible for additional credit facilities until such debts are settled.
The restriction also extends to other banking services that create financial exposure for banks. These include letters of credit, bankers’ confirmations, performance bonds, and advance payment guarantees.
The CBN stressed that the policy is particularly targeted at large obligors whose unpaid debts could pose significant risks to the banking sector if left unchecked.
Industry analysts say the directive is part of broader efforts by the apex bank to strengthen risk management in Nigeria’s banking industry and encourage responsible borrowing. They note that stricter credit checks and enforcement measures could help reduce the volume of bad loans in the financial system.
The latest move signals the regulator’s determination to maintain financial stability while ensuring that borrowers adhere to agreed loan repayment terms.