The Central Bank of Nigeria (CBN) has directed bank directors with non-performing insider-related loans to resign immediately. This directive, issued in a circular signed by Acting Director of Banking Supervision, Adetona Adedeji, aims to strengthen corporate governance and enhance risk management in the banking sector.
According to the CBN, any directors with outstanding insider-related facilities must leave the board while their banks recover the loans through collateral seizures, including shares held by the affected directors. Insider loans are credit facilities granted to bank executives, board members, or related parties, and when they default, they threaten financial stability.
The directive, grounded in Section 19 of the Banking and Other Financial Institutions Act (BOFIA) 2020, mandates:
- Immediate remediation of insider-related loans through collateral recovery.
- Regularization of insider-related facilities above prescribed limits within 180 days.
- Compliance with lending limits, ensuring no director exceeds 5% of the bank’s paid-up capital and total insider-related loans remain within 10%.
The CBN warned banks to fully adhere to these rules to uphold sound corporate governance. A senior banking executive, speaking anonymously, commended the move, stating it would restore confidence in the sector by holding directors accountable and deterring future misconduct.
The CBN’s decisive action reflects its commitment to enforcing transparency, preventing financial mismanagement, and safeguarding depositors' funds, thereby ensuring stability within Nigeria’s banking industry.
