Abuja, Feb. 18, 2025 – The Central Bank of Nigeria (CBN) has directed bank directors with non-performing insider-related loans to resign immediately.
Insider loans refer to loans granted by a bank to its own executives, directors, employees, major shareholders, or related parties.
The apex bank gave the directive on Monday in a circular signed by Adetona Adedeji, its Acting Director of Banking Supervision.
It said the decision was to strengthen corporate governance and improve risk management in the banking sector.
The CBN directed all banks to take action by recovering debts through collateral enforcement and seizing the shareholdings of the affected directors.
According to the circular, “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 circular reads.
The CBN further directed that in accordance with Section 19 of the Banking and Other Financial Institutions Act, BOFIA, 2020, all banks are required to implement the following directives concerning the insider-related loans on their books.
“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 the BOFIA, 2020, which were approved by the CBN without specific timelines,” the apex bank said.
“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.”
“Paid-up capital refers to the total amount of money a company has received from its shareholders in exchange for stock shares.
“Regarding insider-related facilities approved by the CBN with specified timelines, the central bank stated that all loans must be regularized within the given timeframes.”
The CBN directed that banks must immediately comply with these directives to meet regulatory requirements and uphold sound corporate governance practices. (GBN)
