The Central Bank of Nigeria (CBN) has issued a strict directive ordering all bank directors with non-performing insider-related loans to resign immediately. This move, aimed at strengthening corporate governance and risk management, was outlined in a circular signed by the Acting Director of Banking Supervision, Adetona Adedeji.
Insider loans refer to loans given by banks to their own executives, directors, employees, major shareholders, or related parties. The CBN has taken this action to ensure that such loans do not compromise the financial health of banks or lead to conflicts of interest.
The circular from CBN stated: “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.”
In line with Section 19 of the Banking and Other Financial Institutions Act (BOFIA) 2020, banks have been directed to implement necessary measures regarding insider-related loans.
“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.
“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,” the CBN said.
