The Central Bank of Nigeria (CBN) has directed bank directors with non-performing insider-related loans to resign immediately.
The directive was issued on Monday in a circular signed by the Acting Director of Banking Supervision, Adetona Adedeji.
Insider-related loans refer to credit facilities extended by a financial institution to its own executives, directors, employees, major shareholders, or other related parties.
According to the CBN, the move aims to strengthen corporate governance and enhance risk management in the banking sector.
“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 collaterals, including the shareholdings of the affected directors,” the circular stated.
Citing Section 19 of the Banking and Other Financial Institutions Act (BOFIA) 2020, the apex bank directed all banks to implement specific measures regarding insider-related loans.
For insider-related facilities previously approved by the CBN without specific timelines, banks must regularize such loans within 180 days to align with the legal limits—individual director-related facilities must not exceed 5% of the bank’s paid-up capital, while the aggregate insider facilities for the bank should not surpass 10% of paid-up capital.
Additionally, loans granted with specific timelines must be regularized within the permitted period.
The CBN emphasized that banks must comply with these directives immediately to uphold regulatory standards and sound corporate governance practices.
