Central Bank of Nigeria Introduces New Rules to Enhance Credit Reporting Transparency

Strategic Insights -

The Central Bank of Nigeria (CBN) has implemented new guidelines to ensure consistency and uniformity in credit reporting among commercial banks. The new rules aim to improve transparency and promote responsible loan management by standardizing key loan parameters and limiting the use of certain repayment structures. The directives follow on-site examinations that revealed inconsistencies in credit printouts presented by some banks, which raised concerns about the accuracy and reliability of submitted data.

Key Takeaways:

  • The new guidelines, outlined in a letter titled 'Additional Guide to the Provision of Information on Credit Printouts', require each loan to maintain the same contract number throughout its life.
  • Banks must provide proof of full repayment for any contract number that no longer appears in the credit report, or it will be treated as a written-off facility and classified as 'lost'.
  • The original date a loan was granted must remain unchanged, even if the facility is restructured or enhanced.
  • Any restructuring or enhancement must be recorded separately, and banks must provide documented evidence of the borrower's request and the revised loan offer terms.
  • The use of 'yearly' and 'bullet' repayment structures is limited to not more than 10 percent of a bank's total loan portfolio.
  • Project-based loans are not allowed to use bullet repayments, unless they are fully backed by cash or have a properly functioning sinking fund that matures before or on the loan's due date.
  • Bullet repayments may only be used where repayments are tied to the sale of the asset financed by the loan or supported by a sinking fund.
  • Loans should not be restructured into bullet repayment unless they were originally issued with that repayment method.

Statistics:

  • 10 percent: the maximum proportion of a bank's total loan portfolio that may use 'yearly' and 'bullet' repayment structures.
  • 12 months: the maximum loan tenor that may not be structured as a bullet repayment.
  • 20(d): the section of the Prudential Guidelines that defines project-based loans, which are not allowed to use bullet repayments.

Sources:

  • "Additional Guide to the Provision of Information on Credit Printouts", Central Bank of Nigeria, June 13, 2025.
  • "Prudential Guidelines for Deposit Money Banks in Nigeria", Central Bank of Nigeria, July 2010.