CBN Moves Against Bank Owners and Directors, Orders Those With Non-Performing Insider Loans to Step Down

The Nigerian banking sector insiders and owners are jittery following a directive from the Central Bank of Nigeria (CBN) for Directors with non-performing insider loans to step down immediately.

“Directors with non-performing inside-related facilities are required to step down immediately, from the board, while the bank should commence immediate remediation of the loans through recovery of the collaterals including the shareholdings of the affected directors,” the CBN said in a letter to all banks seen by MoneyCentral.

The CBN in a letter issued to all banks yesterday February 17, 2025 titled ‘Compliance With Insider-Related Credit Limits’ ordered all banks to regularize within 180-days all insider-related facilities above the limits prescribed in Section 19 5) of the Banking and Other Financial Institutions Act (BOFIA) 2020.

“Accordingly all affected individual director-related facilities should be brought within the prescribed limit of 5 percent of the bank’s paid-up capital while the aggregate insider facilities for the bank should not exceed the 10 percent paid-up capital limit,” the letter signed by Adetoa Adedeji, Acting Director of Banking Supervision said.

“All insider-related loans approved by the CBN with specific timelines must be regularized within the permitted timelines.”

The CBN said all banks are expected to comply with the directive effective immediately in adherence to regulatory and sound corporate governance practices.

What it means for Bank owners and Directors

Central Bank sources tell MoneyCentral that the CBN is trying to reduce the abuse of insider-related loans by bank owners and Directors.

“Some owners/Directors using multiple companies can get up to $1 billion in outstanding loans, often way higher than single obligor limits. The CBN is now telling them to go and pay back those loans and bring them under the  BOFIA limits. We expect the enforcement of this by the regulator to be thorough,” the source told MoneyCentral.

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