CBN Prohibits Loan Defaulters From Getting Further Credit

  A circular has been issued to all deposit banks, development finance institutions and the Asset Management Corporation of Nigeria by the Central Bank of Nigeria, prohibiting them from granting credit facilities to loan defaulters. It stated, “The Central Bank of Nigeria (CBN) has noted with concern the impunity with which some borrowers default on their loans in some institutions and yet are availed further credit facilities by other institutions under the same or sometimes, a different identity. This trend could have the effect of triggering serial defaults and a build-up of non-performing loans, which could negatively impact liquidity in the financial sector and ultimately hamper its stability.” In a statement signed by the Director of Banking Supervision, Tokunbo Martins, the Central Bank stated, “No institution shall without the prior written approval of the CBN grant a facility to a potential borrower who is in default of any existing facility to the tune of N500 million and above in the case of development banks and banks in liquidation.” In another separate circular concerning the timeline for the resolution of complaints on excess charges and loans, the CBN has approved a timeline of 30 days as opposed to a previous timeline of 14 days, noting that the 14-day timeline for the resolution of complaints on excess charges and loans has been inadequate.