The Central Bank of Nigeria (CBN) has directed bank directors with non-performing insider-related loans to step down from their positions immediately.

The directive, issued in a circular signed by the Acting Director of Banking Supervision, Adetona Adedeji, on Monday, is aimed at strengthening corporate governance and improving risk management within the banking sector.

Insider loans refer to credit facilities granted by a bank to its executives, directors, employees, major shareholders, or related parties.

CBN in the circular instructed banks to take urgent steps to recover such outstanding debts, including enforcing collateral and seizing the shareholdings of affected directors.

“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 stated.

The apex bank further directed financial institutions to comply with Section 19 of the Banking and Other Financial Institutions Act 2020, which regulates insider-related lending.

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“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 BOFIA 2020, which were approved by the CBN without specific timelines.

“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 per cent paid-up capital limit,” it added.

Paid-up capital refers to the total funds a company has received from shareholders in exchange for shares.

For insider-related loans that were approved with specific timelines, the CBN mandated that all outstanding obligations be regularised within the permitted period.

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