The Central Bank of Nigeria (CBN) has issued a stern directive to commercial banks, ordering them to immediately halt the extension of further credit to “large-ticket obligors” who have failed to repay existing loans.

This move targets high-value borrowers, both individuals and corporations, whose massive unpaid debts are deemed a systemic risk to the stability of the nation’s financial infrastructure.

Under the new mandate, any borrower identified as a non-performing large-ticket obligor within the Credit Risk Management System (CRMS) or by licensed private credit bureaus is strictly barred from accessing new loans.

The restriction extends beyond simple cash advances to include a wide array of banking services such as letters of credit, performance bonds, bankers’ confirmations, and advance payment guarantees.

To further insulate the banking sector from potential defaults, the apex bank has instructed financial institutions to demand additional realisable collateral from these heavy debtors.

This measure is intended to ensure that existing exposures are adequately secured, protecting depositors’ funds and maintaining the capital adequacy ratios of the affected banks.

The CBN defined these specific obligors as customers whose total debt across the banking industry either exceeds the Single Obligor Limit (SOL) or materially threatens a bank’s financial health.

By targeting these specific entities, the regulator aims to curb credit abuse and prevent a ripple effect that could destabilize the broader economy.

This latest policy reinforces a previous circular from 2014, signaling a renewed and more aggressive stance on credit discipline. Coming just a week after the CBN ordered banks to conduct comprehensive stress tests, the directive underscores a prioritized mission to sanitize the Nigerian banking system and enforce stricter prudential compliance. (TRIBUNE)

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