The Central Bank of Nigeria (CBN) has directed commercial banks to restrict access to a range of banking services for large borrowers whose loans have turned non-performing, tightening oversight as the industry’s bad-loan ratio rises above regulatory limits.
In a circular dated March 12, 2026, and signed by Director of Banking Supervision Olubukola Akinwunmi, the regulator instructed lenders to immediately deny new credit and certain trade finance services to “large-ticket obligors” whose facilities are classified as non-performing and recorded in the Credit Risk Management System (CRMS) or in any licensed private credit bureau.
The directive took effect immediately upon issuance, with no transition period.
Restrictions on Borrowers With Non-Performing Loans
Under the new rule, borrowers whose facilities are classified as non-performing will no longer be eligible to obtain additional credit from the banking system. Banks are barred from approving fresh loans or other direct lending arrangements for such borrowers. The restrictions also extend to contingent liabilities commonly used in trade finance. These include letters of credit, performance bonds, bankers’ acceptances and advance payment guarantees.
The measure applies where the borrower’s non-performing loan is recorded either in the CRMS database maintained by the central bank or in records maintained by licensed private credit bureaus.
Focus on Large-Ticket Obligors
The directive specifically targets borrowers classified as large-ticket obligors, customers whose cumulative credit exposure across the banking system exceeds the Single Obligor Limit. Such exposures are considered to carry higher systemic risk because they can weaken a lender’s capital position if repayment problems emerge.
Nigeria’s banking industry has recently seen a rise in impaired loans, with the sector’s non-performing loan ratio reaching about 7%, above the regulator’s benchmark ceiling of 5%. By limiting further financial access for borrowers already in default, the central bank is seeking to tighten credit discipline and limit the accumulation of additional risk on bank balance sheets.
Verification Requirements for Banks
Banks are now required to verify borrower records against the CRMS and licensed credit bureau databases before granting credit facilities or trade-related instruments. Financial institutions have also been advised to strengthen risk controls by demanding additional collateral from affected borrowers in order to secure existing exposures. The regulator said these steps are necessary to reduce the build-up of credit risk and encourage borrowers to regularise outstanding obligations.
Single Obligor Limit Framework
Under the Single Obligor Limit framework maintained by the Central Bank of Nigeria, banks are required to cap lending to a single borrower or related group at a defined percentage of their shareholders’ funds.
For most commercial and merchant banks, the limit is generally set at about 20% of shareholders’ funds unimpaired by losses. Some institutions apply stricter internal thresholds. Foreign-currency lending exposures are subject to similar concentration limits, typically capped at 20% of equity for a single borrower.
Recapitalisation Programme and Capital Rules
The new directive comes as the central bank presses lenders to comply with higher capital requirements under an ongoing recapitalisation programme scheduled to conclude on March 31, 2026.
The programme increases the minimum capital thresholds across banking categories, including ₦500 billion for international commercial banks and ₦200 billion for national commercial banks. Regional commercial banks are required to maintain a minimum capital base of ₦50 billion, while national merchant banks face the same threshold. Non-interest banks must maintain at least ₦20 billion for national licences and ₦10 billion for regional operations.
Additional Restrictions for Non-Compliant Banks
Banks that have yet to meet the new capital thresholds or that are currently benefiting from regulatory forbearance on large exposure limits face additional restrictions. These include suspension of dividend payments to shareholders, deferral of bonuses for directors and senior management, and a prohibition on new investments in foreign subsidiaries.
Jefferson Wachira is a writer at Africa Digest News, specializing in banking and finance trends, and their impact on African economies.