CBN warns Banks against lending to loan defaulters

The Central Bank of Nigeria (CBN) has warned that banks which fail to comply with its directive restricting loan defaulters from accessing further credit facilities will face regulatory sanctions.

The apex bank stated that the directive aligns with existing regulatory measures, particularly the circular titled “Prohibition of Loan Defaulters from Further Access to Credit Facilities in the Banking System,” issued on June 30, 2014 (Ref: BSD/DIR/GEN/LAB/07/015).

According to the CBN, the move is aimed at ensuring consistency and effectiveness in curbing credit abuse by large-ticket obligors within the banking sector.

“This is to ensure consistency and effectiveness in curbing credit abuse by large-ticket obligors,” the circular stated.

The bank also noted that it will closely monitor compliance with the directive to ensure uniform implementation across the banking industry.

It warned that violations of the directive would attract regulatory sanctions.

The CBN added that any case of non-compliance would be treated in accordance with the provisions of the Banks and Other Financial Institutions Act 2020 (BOFIA).