Central Bank of Nigeria (CBN) has directed banks across the country to restrict key banking services for large borrowers who fail to repay their loans, as Nigeria’s bad loan ratio rises above the regulator’s 5 percent benchmark.
The move is aimed at strengthening the stability of the financial system and reducing the risks associated with rising levels of non-performing loans.
New directive to banks
In a letter dated March 12, 2026, and signed by Olubukola Akinwunmi, Director of Banking Supervision, the CBN instructed all banks operating in Nigeria to stop providing certain financial services to borrowers whose loans have been classified as non-performing.
Under the directive, large borrowers who have defaulted on loan repayments will no longer be eligible to obtain new credit or access certain banking facilities. The restriction applies to defaults recorded in the CBN’s Credit Risk Management System or through licensed private credit bureaus.
Who the policy targets
The measure focuses on what the regulator describes as “large-ticket obligors.” These are individuals or companies whose total borrowing across multiple banks is significant enough to affect the financial health of a bank or pose broader risks to the banking sector.
In addition to being barred from new loans, affected borrowers will also lose access to several bank-backed financial instruments. These include letters of credit, performance bonds, banker confirmations, and advance payment guarantees.
Banks have also been instructed to obtain additional collateral from such borrowers to strengthen the security of the loans already granted.
Understanding non-performing loans
A loan is classified as non-performing when the borrower fails to make repayments for at least 90 days. Once this happens, banks are required to report the facility in the CBN’s credit monitoring system.
This classification triggers the restrictions outlined in the new directive.
According to the regulator, the policy is designed to prevent large loan defaults from creating wider problems within the banking industry. When major borrowers fail to meet their obligations, the financial strain can reduce a bank’s capital and, in extreme situations, threaten the stability of the system.
Rising bad loan levels
The directive comes at a time when non-performing loans in Nigeria’s banking sector are increasing. Data from the CBN indicates that the industry’s bad loan ratio rose to about 7 percent in 2025, exceeding the regulator’s 5 percent threshold.
Part of this increase followed the expiration of a pandemic-era policy that allowed banks to restructure struggling loans without officially classifying them as non-performing. After the relief window ended, many of those loans returned to their original status, pushing bad loan figures higher.
Compliance and possible sanctions
The CBN noted that it will closely monitor how banks implement the directive. Financial institutions that fail to comply may face regulatory penalties under the Banks and Other Financial Institutions Act 2020.
What it means for borrowers
In practical terms, the policy means that large borrowers who default on their loans may find it difficult to access new banking services until their outstanding debts are resolved.
Through this directive, the CBN is sending a clear message that unpaid debts carry consequences and that banks must enforce stricter credit discipline across the financial sector.
