In a decisive move to promote transparency and efficiency within Nigeria’s banking sector, the Central Bank of Nigeria (CBN) has issued a fresh set of operational guidelines aimed at standardising credit reporting practices among commercial banks and other financial institutions. The apex bank stated that the new rules are designed to enhance data accuracy, ensure uniformity, and improve the overall credit risk management framework in the country.
According to a circular signed by the CBN’s Director of Financial Policy and Regulation Department, Haruna B. Mustafa, the guidelines are in line with the CBN’s mandate to protect the financial system and deepen financial inclusion. The circular, which was sent to all deposit money banks, merchant banks, development finance institutions, microfinance banks, and other licensed lenders, emphasized that the new directives must be strictly adhered to in all credit reporting and risk assessment operations.
The regulatory framework compels financial institutions to submit accurate, timely, and comprehensive credit information to licensed credit bureaus, in accordance with the Credit Reporting Act 2017 and the guidelines for licensing, operations, and regulation of credit bureaus in Nigeria. The CBN noted that many banks and financial entities had previously submitted incomplete or inconsistent credit data, a practice which it says hampers proper evaluation of borrowers’ creditworthiness and increases systemic risk.
Under the new regime, banks are now required to update customers’ credit profiles regularly and ensure any new loan or repayment data is promptly reported. Lenders must also obtain written consent from customers before sharing their credit information, in line with consumer protection standards. Furthermore, failure to comply with the new rules could attract regulatory sanctions, including monetary penalties or other enforcement actions deemed appropriate by the apex bank.
The CBN also stressed that improved credit reporting would not only reduce loan defaults and non-performing loans (NPLs), but also boost investor confidence and foster responsible lending across the financial system. By enforcing these standards, the central bank aims to build a more resilient banking sector, reduce the level of impaired assets, and support the stability of Nigeria’s economy.
The development comes as part of broader efforts by the CBN to reform credit administration and encourage disciplined lending practices. Financial analysts believe that these measures, if effectively implemented, could significantly lower the risk of loan defaults, enhance access to credit for eligible borrowers, and stimulate economic activity by making Nigeria’s credit system more trustworthy and efficient.
This regulatory intervention is timely, especially as the banking sector continues to grapple with the twin challenges of inflationary pressures and foreign exchange volatility. As at the last financial year, the ratio of non-performing loans in Nigeria hovered around the regulatory threshold of 5%, according to CBN data. Industry observers suggest that consistent and transparent credit reporting can help lower this figure and restore investor trust in the sector.
The CBN reiterated its commitment to working with relevant stakeholders to ensure smooth implementation of the guidelines, while urging financial institutions to prioritise compliance as part of their risk management and corporate governance obligations.
