Nigeria’s Central Bank (CBN) has ordered lenders to restrict large borrowers with non-performing loans from accessing new credit, a measure aimed at safeguarding the banking system and protecting depositors amid rising financial risks.
The directive, effective immediately, was issued to all banks on Thursday. It bars “any large-ticket obligor with a non-performing facility recorded in the CRMS and/or any licensed private credit bureau” from obtaining additional loans or other forms of direct credit. The restriction also applies to contingent liabilities, including letters of credit, performance bonds, bankers’ confirmations, and advance payment guarantees, the central bank said.
Large-ticket obligors are defined as clients or groups of related borrowers whose exposure to a single bank equals at least ten percent of the bank’s shareholders’ funds, unimpaired by losses. Borrowers whose total exposure across multiple banks exceeds the single-obligor limit, potentially affecting capital adequacy ratios or posing systemic risks, also fall under the rule.
The CBN emphasized that banks must secure existing exposures from such borrowers by obtaining additional realizable collateral. “The directive is intended to reinforce prudential practices and ensure that banks remain resilient in the face of credit risks posed by large borrowers with impaired facilities,” the regulator said.
The move builds on earlier steps to protect Nigeria’s financial sector. In June 2025, the central bank ordered lenders that had benefited from COVID-19 forbearance policies to suspend dividend payments, executive bonuses, and international expansion until they fully provisioned for impaired loans. The forbearance program had allowed banks to restructure pandemic-affected loans without immediately recording losses on their books.
First HoldCo, one of Nigeria’s largest lenders, has already taken proactive measures, making a one-time provision of seven hundred forty-eight billion naira for non-performing loans in the 2025 financial year. Chairman Femi Otedola said the decision aligned with the CBN’s tough stance on curbing bad loans and safeguarding systemic stability.
Experts say the new rule will compel banks to exercise greater caution when lending to high-risk clients, while encouraging borrowers to maintain sound financial discipline. “Limiting credit to large borrowers with poor repayment histories is crucial to protect the system, especially institutions with significant exposure to single clients,” said a Lagos-based banking analyst.
The directive has significant implications for businesses, particularly in sectors heavily reliant on bank financing. Large corporates and conglomerates with existing non-performing loans will now face tighter credit access, potentially affecting operations, investment, and expansion plans. Analysts predict that some companies may need to restructure debt, liquidate assets, or seek alternative financing arrangements to continue operations.
For smaller businesses and households indirectly affected, the policy could lead to tighter lending conditions as banks adjust overall risk management strategies. Borrowers may face more rigorous credit assessments, higher collateral requirements, and slower loan approvals, increasing operational challenges for businesses dependent on timely funding.
Non-performing loans have been a persistent concern in Nigeria, where weak repayment practices and delayed recoveries occasionally threaten liquidity and capital adequacy. By restricting access to new credit for high-risk borrowers, the CBN aims to curb further accumulation of risky exposures and protect both lenders and depositors.
The move also underscores ongoing efforts to align Nigerian banking practices with international prudential standards, emphasizing risk mitigation, transparency, and capital resilience. Banks are now expected to monitor large obligors more closely, ensure adequate collateral, and maintain rigorous lending standards.
Economic analysts say that, while the measure may temporarily constrain liquidity for some borrowers, it strengthens the overall resilience of Nigeria’s financial system. “This policy protects depositors and promotes responsible lending,” said a senior economist at a Lagos-based research institute. “It’s a necessary step to prevent systemic shocks and maintain confidence in the banking sector.”
The CBN directive comes amid broader economic reforms, including efforts to stabilize the currency, improve monetary policy frameworks, and address structural weaknesses in financial markets. Observers note that continued enforcement of such prudential measures is critical for maintaining investor confidence, promoting sustainable growth, and ensuring that banks can withstand economic shocks.
For large borrowers with a history of defaulting or delayed payments, the new reality is clear: access to bank credit will now depend on strict repayment records, sound financial management, and compliance with collateral requirements. Businesses that fail to meet these standards risk restricted financing, potentially slowing expansion and investment plans in a country where bank lending remains a crucial source of capital.
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As Nigeria continues to navigate economic and financial challenges, the central bank’s directive signals a renewed focus on prudent risk management, discipline in lending, and systemic stability, priorities that financial experts say are essential for the long-term health of the nation’s banking sector.
