CBN Orders Banks to Restrict Access to Banking Services for Loan Defaulters

Nigeria's banking regulator has told banks to stop offering certain services to large borrowers who have failed to repay their loans, a move aimed at protecting the country's financial system from the risks posed by bad debt.

The Central Bank of Nigeria (CBN) issued the directive in a letter dated March 12, 2026, signed by Olubukola Akinwunmi, Director of Banking Supervision. The letter was addressed to all banks operating in the country.

Under the new rules, any large borrower with a loan classified as non-performing, meaning they have fallen behind on repayments, will no longer be allowed to take on new loans or access other banking facilities. This applies whether the default is recorded in the CBN's own Credit Risk Management System (CRMS) or through any licensed private credit bureau.

The restrictions target what the CBN calls "large-ticket obligors." In plain terms, these are borrowers, individuals or companies, whose combined debt across multiple banks is large enough to affect a bank's financial health or pose a broader risk to the banking system.

Beyond being blocked from new loans, these borrowers will also be unable to access other bank-backed financial tools such as letters of credit, performance bonds, bankers' confirmations, and advance payment guarantees. Banks have also been directed to collect additional collateral from affected borrowers to better secure the loans already owed.

A loan is classified as non-performing when a borrower has missed repayments for 90 days or more. At that point, banks are required to flag the facility in the CRMS. This classification is what triggers the restrictions outlined in the CBN's latest directive.

The CBN said the measure is designed to limit the damage that large loan defaults can cause to the banking sector. When a big borrower fails to repay, the impact can ripple across the financial system, shrinking a bank's available capital and, in serious cases, threatening its stability.

This is not the first time the regulator has taken this step. A similar directive was issued on June 30, 2024. The CBN says the latest directive builds on those earlier measures and is intended to reinforce credit discipline across the industry.

The directive comes against the backdrop of a fresh rise in bad loans across Nigeria's banking sector. The CBN's own data shows that the industry's Non-Performing Loan (NPL) ratio climbed to an estimated 7% in 2025, above the 5% ceiling set by the regulator.

The increase followed the expiry of a pandemic-era policy that had allowed banks to restructure struggling loans without formally classifying them as non-performing. Once that relief window closed, many of those restructured loans reverted to their true status, pushing the bad loan figures higher.

The CBN said it will monitor compliance across the banking industry and warned that banks that fail to follow the directive will face regulatory sanctions under the Banks and Other Financial Institutions Act (BOFIA) 2020.

In simple terms, if you owe a bank a significant amount of money and have stopped repaying it, you will now find many doors in the financial system closed to you. The CBN's message to large defaulters is straightforward, stating that outstanding debts have consequences, and the regulator intends to make sure banks enforce that consistently.

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