CBN Sets Sanctions for Access, GTB, UBA, Other Bank Directors With Non-Performing Loans

• The Central Bank of Nigeria has sent a note of warning to top directors of banks taking loans and not paying back on time
• The apex bank, among other sanctions, plans to blacklist bank directors with non-performing loans from financial institution boards for over one year
• CBN has also provided set down rules for banks looking at generously writing off the loans of the directors

The Central Bank of Nigeria (CBN) has announced plans to sanction bank directors with over a year of non-performing loans.

This was contained in the new corporate governance guidelines for commercial banks, financial holding companies (FHCs), merchant banks, and non-interest and payment service banks, released by the CBN and obtained by Legit.ng.

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A non-performing loan (NPL), also known as a bad loan, is a loan collected whose scheduled payments have not been made by the debtor for some time.

CBN sends strong warning to directors on non-performing loan

CBN, in its circular, stressed that it would henceforth remove directors with bad loans from the board of banks and blacklist them from any other financial institution.

Part of the document reads:

“Any director whose credit facility or that of his/her related interests remains non-performing in the banking subsidiary of an FHC, for more than one year, shall cease to be on the Board of the Financial Holding Company (FHC) shall be blacklisted from sitting on the Board of such banking subsidiary or that of any other financial institution under the purview of the CBN."

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The apex bank also warned banks considering debt forgiveness for a director to only do so if it approves.

CBN said:

"No loan/advance and interest thereon to a director of an FHC by the banking subsidiary shall be written-off without its prior approval."

CBN issues 4 new directives to Access, Zenith, GTB on domiciliary bank accounts

Meanwhile, in another report, the CBN has released six new directives on how domiciliary bank accounts should operate in the country.

The move aims to promote transparency, discourage speculation, and ensure overall stability in the forex market.

Access, Zenith, and Guaranty Trust, among several other commercial banks, are expected to make the necessary adjustments.

Source: Legit.ng