The Central Bank of Nigeria (CBN) has issued two major directives aimed at strengthening governance and transparency in the banking sector, ordering directors with non-performing loans to step down immediately while also requiring financial institutions to publish details of dormant accounts and unclaimed balances.
In a circular dated February 17 and signed by Acting Director of Banking Supervision Adetona Adedeji, the CBN mandated that bank directors with non-performing insider-related loans must immediately vacate their positions. Banks are also required to recover outstanding debts by enforcing collateral recovery and taking possession of affected directors' shareholdings.
"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.
Under Section 19(5) of the Banking and Other Financial Institutions Act (BOFIA) 2020, individual directors cannot hold insider loans exceeding 5 percent of a bank's paid-up capital, while aggregate insider-related facilities must remain below 10 percent. The CBN has given banks 180 days to regularize loans exceeding these statutory limits.
In a separate directive issued Monday, the apex bank ordered all financial institutions to publish details of dormant accounts and unclaimed balances on their official websites. A dormant account is defined as one that has remained inactive for at least one year.
The publication must include "the name of the account, the type of account, the name of the bank, and the branch where the account is domiciled ONLY," according to the circular signed by Michael Akuka for the director of financial policy and regulation. Financial institutions without websites must publish this information on their association's website.
The CBN clarified that this directive is in compliance with Section 25(b) of the Nigeria Data Protection Act, which permits justifiable deviations from general principles, and Section 72(ii) of BOFIA, which authorizes the CBN to issue guidelines on administering unclaimed funds.
Financial institutions are also required to publish these details annually in at least two national daily newspapers. For State and Unit microfinance banks, the information can be displayed on their premises.
These directives follow the CBN's July 19, 2024 order for banks to deposit unclaimed balances and funds in dormant accounts to the apex bank, and the June 2024 revocation of Heritage Bank's license, signaling the regulator's continued push for stricter financial discipline in Nigeria's banking sector.
