Central Bank of Nigeria Bars Loan Defaulters from New Bank Credit and Financial Services

The Central Bank of Nigeria has introduced stricter measures against loan defaulters, directing banks to deny certain banking services and additional credit facilities to borrowers with non-performing loans.

The directive is part of efforts by the apex bank to strengthen credit discipline and reduce financial risks within Nigeria’s banking sector.

According to a circular dated March 12, 2026, and signed by the Director of Banking Supervision, Olubukola Akinwunmi, financial institutions are now required to restrict access to further credit for large borrowers whose loans have been classified as non-performing.

Under the new policy, any borrower with a non-performing loan recorded in the Credit Risk Management System or reported by licensed private credit bureaus will no longer qualify for additional credit facilities from banks.

The Central Bank explained that the restriction covers loans and other direct credit facilities offered by banks. In addition, affected borrowers will not be able to access certain banking services that involve financial guarantees.

These services include bankers’ confirmations, letters of credit, performance bonds, and advance payment guarantees, which are commonly used in major commercial transactions and corporate financing.

The apex bank stated that the measure targets large-ticket obligors whose loan defaults could pose risks to financial system stability.

Under existing prudential guidelines for deposit money banks, large-ticket borrowers are individuals or companies whose combined loan exposure across multiple banks exceeds the Single Obligor Limit or whose obligations have the potential to significantly impact a bank’s capital adequacy ratio.

To further protect the banking system, the Central Bank also directed banks to request additional realizable collateral from affected borrowers in order to properly secure existing loan exposures.

The regulator said banks must rely on data captured in the Credit Risk Management System as well as reports obtained from licensed private credit bureaus when determining the credit status of borrowers.

The directive reinforces an earlier circular issued by the Central Bank in June 2024, which prohibited loan defaulters from obtaining new credit facilities within Nigeria’s banking system.

Financial analysts say the move is part of ongoing reforms aimed at strengthening risk management, improving loan recovery, and maintaining stability within the financial sector.

The development comes amid growing concerns over rising non-performing loans in the banking industry, prompting regulators to introduce stricter compliance measures for both lenders and borrowers.

With the latest directive now in effect, borrowers with outstanding loan defaults are expected to settle their obligations before they can regain access to banking credit facilities and related financial services.