The Central Bank of Nigeria has mandated bank directors with non-performing loans to step down immediately.
The CBN, in a circular letter dated 17 February 2025, signed by Adetona Adedeji, the acting director of Banking Supervision, states:
“Directors with non-performing insider-related facilities are required to step down immediately from the board, while the bank should commence immediate remediation of the loans through the recovery of the collaterals including the shareholdings of the affected directors.”
The apex bank said the directive was in line with the decision to improve risk management and strengthen corporate governance in the banking sector.
CBN ordered affected banks to comply with Section 19 of the Banking and Other Financial Institutions Act (BOFIA), 2020 by ensuring proper regulation of insider-related loans.
The statement continues:
“Insider-related facilities approved by the CBN without specific timelines: Banks are required to regularise within 180 days all insider-related facilities above the limits prescribed in Section 19(5) of BOFIA 2020, which were approved by the CBN without specific timelines.”
Insider loans are loans provided to a bank’s executives, directors, employees, or related parties.
Furthermore, CBN stated that all insider-related loans approved with specific timelines must be regularised within the permitted period.
According to Section 19 (5) of BOFIA, individual bank directors are not permitted to hold insider loans exceeding 5 percent of the bank’s paid-up capital, while the aggregate insider-related facilities for the entire must not exceed 10 percent of the paid-up capital.
The apex bank has ordered all banks to comply with the directives and ensure the integrity of Nigeria’s financial system.
This new directive from CBN reinforces its commitment to ensuring the financial system’s stability and protection of customers’ interests.
