The Central Bank of Nigeria (CBN) has directed bank directors with non-performing insider-related loans to immediately step down.
This decision is aimed at strengthening corporate governance and improving risk management in the banking sector.
The directive was issued in a circular signed by the Acting Director of Banking Supervision, Adetona Adedeji, on Monday.
“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.
Insider loans refer to credit facilities granted by banks to their own executives, directors, employees, major shareholders, or affiliated parties. Poor management of such loans has been a significant concern in Nigeria’s banking sector, posing risks to financial stability.
To minimise financial risks, the Central Bank of Nigeria has instructed banks to recover outstanding debts by enforcing collateral and seizing the shareholdings of affected directors.
The circular states that directors with non-performing insider-related facilities must step down immediately from the board, while banks should begin loan recovery by reclaiming collaterals, including the shareholdings of those directors.
Additionally, the Central Bank of Nigeria has mandated banks to comply with Section 19 of the Banking and Other Financial Institutions Act 2020, which regulates insider-related loans.
This directive is part of broader efforts to enhance transparency and accountability within the banking system.
