The Central Bank of Nigeria (CBN) has asked commercial banks to restrict loan defaulters, specifically large-ticket obligors, from accessing credit facilities.
A large ticket obligor is a borrower (an individual or company) that owes a very large amount of money to a bank. The CBN issued the directive in a circular to banks seen by The Cable on Monday.
The latest instruction comes almost a week after the CBN asked financial institutions to stress test. It is uncertain if the two directives are connected or what may have triggered the loan-related instruction, but the apex bank said it furthers its mandate to protect Nigeria’s financial system.
“In furtherance of its mandate to promote a sound financial system, protect depositors, and enhance prudential compliance within the banking sector, the Central Bank of Nigeria (CBN) hereby directs all banks to restrict non-performing large ticket obligors, whose activities pose systemic risk to the financial system, from accessing specified banking services,” the circular reads in part.
“Any large-ticket obligor with a non-performing facility recorded in the CRMS and/or any licensed private credit bureau shall not be granted additional credit facilities. For the purpose of this restriction, credit facilities include loans and other forms of direct credit.
“In addition, such obligors shall not be granted banking facilities or contingent liabilities such as bankers’ confirmations, letters of credit, performance bonds, or advance payment guarantees.”
