Banking
Nigerian Senate Discusses Bill to Punish Loan Defaulters
By Dipo Olowookere
One of the major headaches of banks in Nigeria is the recovery of loans to customers and because of this, many of them are reluctant to grant credit facilities.
It was only recently financial institutions were forced to issue loans to their customers when the Central Bank of Nigeria (CBN) mandated them to meet a loan-to-deposit ratio of 60 per cent and later to 65 per cent.
The interpretation of this CBN policy is that 65 per cent of a bank’s total customer deposits must be given out as loans. Failure to adhere to this directive attracts fines from the apex bank. A few of them have been sanctioned for this infraction.
The idea behind this, according to the central bank, was to ensure that funds are made available to the real sectors of the economy, especially the manufacturing, the SMEs and others, so as to spur economic activities and boost the nation’s gross domestic product (GDP).
The banks reluctantly adhered to this instruction and those who failed were punished, but the issue of loan recovery was not fully addressed despite the rise in credit bureau agencies in the country.
But to strengthen the financial system and ensure quick loan recovery process, the Senate is looking to come up with laws that would punish loan defaulters.
On Tuesday, a bill for an act to establish a unified scheme for a sound financial system passed second reading at the Senate and was referred to the committee on banking insurance and other financial institutions for scrutiny, with a mandate to report back in four weeks.
According to the sponsor of the bill, Mr Sani Musa, when passed into law, banks would have the authority to track loan defaulters’ account in any financial institution in the country through the Bank Verification Number (BVN).
When this is done, the bank would be empowered to recover the loans from the bank account of the defaulter.
He further said the law will provide penalties for breaches and violations of obligations, thereby enhancing the loan recovery process across banking sectors in Nigeria.
“Before the deregulation of our banking system, the ability of our banks to recover loans has been the bedrock behind the collapse of many commercial banks with a dire consequence to many innocent account holders, which have resulted in the collapse of their businesses, loss of savings and even death.
“In many instances, most economies have consequently experienced high level and increasing rates of unemployment as a result of such negligences of the credit system.
“Today, the situation in Nigeria has become very serious and seemingly intractable and thereby frustrates our effort as a nation toward private driven economy as well as economic diversification and growth.
“In light of the above, there is only one obvious option left for any country where policy measures failed, which is to urgently enact legislation that will address the problems once and for all,” Mr Sani submitted.
Speaking further, the lawmaker described lending as the core business of commercial banks, noting that if they are unable to grant loans because of a bad recovery process, the nation’s economy might suffer for it.
“Credit is seen as the bloodstream of the banking business [and] the [current] situation in Nigeria demands an injection of a healthy bank credit and recovery system that will effectively fasten the pace of growth,” he added.
In his contribution, his colleague at the red chamber, Mr Tolu Odebiyi, said, “I think this is a very timely bill and it will safeguard our economy and creditors from defaulters.”
On his part, the Deputy Senate President, Mr Ovie Omo-Agege, who presided over the session, applauded the sponsor of the bill, stating that, “Clearly, there are challenges in the sector that we need to address and this bill seeks to do just that.”
By Modupe Gbadeyanka
In a bid to strengthen the Naira and ensure transparency, traceability, and effective monitoring of all transactions, the Central Bank of Nigeria (CBN) has directed all International Money Transfer Operators (IMTOs) in the country to open Naira settlement accounts for all transactions.
In a circular dated Tuesday, March 24, 2026, the apex bank said IMTOs have till May 1, 2026, to fully adhere to this directive and others.
It noted that transactions must be “routed strictly through their designated settlement accounts, maintained with Authorised Dealer Banks (ADBs) in Nigeria.”
With this development, diaspora remittances must be paid to beneficiaries in the local currency.
“All transactions arising from international money transfer operations, including disbursements to beneficiaries and any related settlements, must be processed exclusively through the IMTO’s settlement account(s) held with any ADB of their choice.
“IMTOs may use their discretion to designate their existing accounts or open new settlement accounts and may operate accounts with multiple ADBs in line with their business strategy,” the central bank emphasised.
“Settlement accounts shall only be credited with remittance flows and proceeds of foreign exchange conversions by licensed IMTOs (or their agents) with authorised market participants in the Nigerian Foreign Exchange Market (NFEM),” the notice also declared.
It stressed further that, “IMTOs shall ensure that their settlement accounts are properly designated for this purpose and operated in accordance with existing regulatory guidelines. A list of designated settlement accounts shall be advised by each licensed 1MTO to the Director, Trade and Exchange Department, and updated regularly as necessary.”
The CBN said to “support market efficiency and enhance pricing outcomes for 1MTO transactions, ADBs may process foreign currency transfers from 1MTO settlement accounts to other ADBs and approved market participants, including licensed BDCs.”
“IMTOs shall observe real-time market prices from the Bloomberg BMATCH and utilise this as guidance for pricing transactions with their customers and Authorised Dealers.
“This will improve price discovery, reduce information asymmetry between 1MTOs and banks, and encourage increased participation in the official FX market,” the disclosure stated.
Concluding, the apex bank said, “All IMTOs are required to ensure full compliance with this directive and maintain adequate records of related transactions for regulatory review and audit purposes,” reminding them to “maintain acceptable standards and comply with AML/CFT/CPF requirements.”
By Aduragbemi Omiyale
The dissolution of the board of Union Bank of Nigeria (CBN) by the Central Bank of Nigeria (CBN) in January 2024 has been nullified by a Federal High Court in Lagos.
In a judgment on Wednesday, Justice Chukwujekwu Aneke ordered the immediate reinstatement of the affected board members.
This ruling has now invalidated all actions taken by the central bank regarding the lender’s leadership change.
Justice Aneke held that the apex bank had no authority to remove the board members, declaring the CBN’s action as “ultra vires.”
Over two years ago, the central bank changed the boards of Union Bank, Polaris Bank, and Keystone Bank, accusing them of violating “sections of the Banks and Other Financial Institutions Act (BOFIA) 2020.”
The sacking of the Union Bank board happened after it was speculated that its acquisition by Titan Trust Bank was suspicious, with some alleging that the embattled former Governor of the CBN, Mr Godwin Emefiele, sold the lender to a proxy.
“This action became necessary due to the non-compliance of these banks and their respective boards with the provisions of Section 12(c), (f), (g), (h) of the Banks and Other Financial Institutions Act, 2020. The Bank’s infractions vary from regulatory non-compliance, corporate governance failure, disregarding the conditions under which their licenses were granted, and involvement in activities that pose a threat to financial stability, among others,” a part of the statement issued by the Acting Director for Corporate Communications at the CBN, Mrs Sidi Ali Hakama, said.
Later, the apex bank appointed Ms Yetunde Oni as the chief executive of Union Bank, with Mannir Ubali Ringim appointed as an executive director.
After the CBN’s action, Titan Trust Bank, Luxis International, and Magna International, which are the core shareholders of Union Bank, challenged the legality of the action in court.
They asked the court to restrain the CBN, Union Bank and the appointed directors from taking further steps pending the determination of the suit.
At today’s judgment, Justice Aneke granted this prayer, restraining the central bank, its agents and appointees from taking any further steps concerning the financial institution, including actions relating to its proposed recapitalisation or any associated measures.
By Modupe Gbadeyanka
A partnership to expand opportunity, entrepreneurship, and sustainable livelihoods for young people across Africa has been signed by Access Bank and King’s Trust International (KTI).
The cooperation marks a significant milestone in advancing cross‑sector collaboration to address youth unemployment, foster entrepreneurship, and drive inclusive growth across Africa.
Under the agreement, Access Bank will support the delivery of KTI’s programmes that empower young people across several African countries, supporting them to gain skills and find pathways into meaningful employment and self-employment across Africa.
It was learned that the collaboration brings together KTI’s expertise in youth development with Access Bank’s pan‑African reach and long‑standing commitment to inclusive and sustainable growth.
Through this alliance, the two organisations will work to equip young people with the skills, confidence and support needed to build successful futures through employment and entrepreneurship.
“At Access Bank, we believe that empowering young people is fundamental to Africa’s sustainable growth. Our partnership with King’s Trust International reinforces our commitment to entrepreneurship, job creation and inclusive development, while enabling us to play a purposeful role in shaping the continent’s future,” the chief executive of Access Bank, Mr Roosevelt Ogbonna, stated.
The chief executive of KTI, Mr Will Straw, while also commenting, said, “This partnership with Access Bank reflects a shared commitment to unlocking the potential of young people across Africa. By combining our experience in youth development with Access Bank’s scale and leadership across the continent, we can create meaningful pathways to opportunity and long‑term impact.”
The signing ceremony was witnessed by senior leaders and representatives from both organisations, alongside distinguished guests, including Mr Aigboje Aig‑Imoukhuede, who is the co-Chair of KTI Africa Advisory Board and Chairman of Access Holdings Plc.
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