The Central Bank of Nigeria (CBN) has directed bank directors with non-performing insider-related loans to step down immediately. This move aims to strengthen corporate governance and improve risk management in the banking sector.
According to the CBN, insider loans refer to loans granted by a bank to its own executives, directors, employees, major shareholders, or related parties. The apex bank has instructed banks to recover debts through collateral enforcement and seize the shareholdings of affected directors.
The CBN’s directive was issued in a circular signed by the Acting Director of Banking Supervision, Adetona Adedeji, on Monday.
The circular stated that directors with non-performing insider-related facilities are required to step down from the board immediately, while the bank should commence immediate remediation of the loans through the recovery of collaterals, including the shareholdings of the affected directors.
The CBN also directed banks to comply with Section 19 of the Banking and Other Financial Institutions Act 2020, which regulates insider-related loans. Banks are required to regularize insider-related facilities within 180 days, ensuring they comply with the prescribed limits.
