The Central Bank of Nigeria (CBN), yesterday, issued a circular to all deposit banks, development finance institutions and the Asset Management Corporation of Nigeria, prohibiting them from granting credit facilities to loan defaulters.
“The Central Bank of Nigeria (CBN) has noted with concern the impunity with which some borrowers default on their loans in some institutions and yet are availed further credit facilities by other institutions under the same or sometimes, different identity,” the circular stated.
It further noted that this trend could “have the effect of triggering serial defaults and a build-up of non-performing loans, which could negatively impact liquidity in the financial sector and ultimately hamper its stability”.
In the statement, signed by the Director of Banking Supervision, Tokunbo Martins, the Apex Bank stated that “No institution shall, without the prior written approval of the CBN, grant a facility to a potential borrower who is in default of any existing facility to the tune of N500 million and above in the case of development banks and banks in liquidation”.
In a separate circular concerning the timeline for the resolution of complaints on excess charges and loans, the CBN said it had approved a timeline of 30 days, as opposed to a previous timeline of 14 days, noting that “the 14-day time line for the resolution of complaints on excess charges and loans has been inadequate.”