The Central Bank of Nigeria has directed commercial banks to deny additional credit and related services to non-performing large-ticket borrowers whose exposures pose systemic risks to the financial system.
The instruction, contained in a circular issued this week, defines large-ticket obligors as individuals or companies with exposures exceeding the Single Obligor Limit that materially affect a bank’s Capital Adequacy Ratio or threaten broader stability.
“In furtherance of its mandate to promote a sound financial system, protect depositors, and enhance prudential compliance within the banking sector, the Central Bank of Nigeria hereby directs all banks to restrict non-performing large-ticket obligors… from accessing specified banking services,” the circular stated.
It further specified: “Any large-ticket obligor with a non-performing facility recorded in the CRMS and/or any licensed private credit bureau shall not be granted additional credit facilities. For the purpose of this restriction, credit facilities include loans and other forms of direct credit.”
Such borrowers will also be barred from contingent liabilities including letters of credit, performance bonds and advance payment guarantees, the apex bank added.
Banks must secure additional realisable collateral to cover existing exposures, with the CBN warning that non-compliance will attract sanctions under the Banks and Other Financial Institutions Act 2020.
The move reinforces a similar prohibition issued on June 30, 2014, aimed at curbing credit abuse by major defaulters.ea348a It follows recent stress tests on financial institutions and comes as banks complete a recapitalisation exercise.
