Lydia Ehisuoria Ohonsi, Esq. and CBN Governor, Olayemi Cardoso
On 12 March 2026, the Central Bank of Nigeria (CBN) issued Circular BSD/DIR/CON/LAB/019/003 directing all deposit money banks to immediately deny further credit and key banking instruments — including letters of credit, performance bonds, bankers’ confirmations, and advance payment guarantees — to large-ticket obligors whose loan facilities are classified as non-performing in the Credit Risk Management System (CRMS) or by any licensed private credit bureau.
The directive is grounded in the CBN’s supervisory authority under the Central Bank of Nigeria Act 2007 and the Banks and Other Financial Institutions Act (BOFIA) 2020, and is reinforced by the Prudential Guidelines for Deposit Money Banks, which define the exposure threshold for large-ticket obligors.
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The directive responds to a deteriorating NPL environment. Following the withdrawal of COVID-19 regulatory forbearance in 2025, the industry-wide non-performing loan (NPL) ratio climbed to an estimated 7%, breaching the CBN’s 5% prudential ceiling. At least eleven commercial banks individually exceeded this threshold. The March 2026 circular directly targets the practice of ‘credit jumping’ — whereby delinquent borrowers migrate between institutions to secure fresh credit — by mandating that all banks query the CRMS before extending any facility and deny access to those already classified as defaulters.
CBN Governor Olayemi Cardoso publicly confirmed the directive’s implementation on 26 March 2026, framing it as part of a broader commitment to credit discipline, financial integrity, and orthodox monetary policy. For affected obligors, the restriction creates a powerful incentive for resolution: only by clearing their NPL classification — through full repayment, structured settlement, or formal restructuring — can access to the banking system be restored.
Effective implementation will require real-time accuracy of CRMS data, transparent administrative processes for disputing erroneous classifications, regulatory guidance on beneficial ownership circumvention, and coherent rules governing the interaction of the restriction with court-sanctioned restructuring arrangements. If consistently enforced, the directive marks a significant step toward a more disciplined, stable, and efficient Nigerian credit market.
Lydia Ehisuoria Ohonsi, Esq.
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