The Central Bank of Nigeria (CBN) has proposed sweeping changes to how disputes between creditors and borrowers are resolved, signaling a decisive move away from courtroom battles toward structured, out-of-court settlements.
The apex bank, in a circular issued on Tuesday and signed by P. I. Oluikpe, Acting Director of the Development Finance Advisory Department, invited lenders, borrowers, legal practitioners, and other stakeholders to review and submit comments on draft guidelines that would formally operationalize the Mediation and Dispute Resolution Panel under the Secured Transactions in Movable Assets (STMA) framework.
The proposed framework positions the panel as the first point of call for resolving disputes arising from collateral-backed lending—a marked shift from litigation-heavy processes toward alternative dispute resolution mechanisms.
While the idea of mediation-first dispute resolution in secured lending is not entirely new, Tuesday’s circular signals the CBN’s most concrete attempt yet to give it teeth.
The framework draws its authority from the Secured Transactions in Movable Assets Act, 2017, which already recognizes the panel as the first recourse for dispute resolution. The CBN is now operationalizing this provision by outlining procedures, roles, and enforcement mechanisms.
Legal experts have long noted that the STMA’s mediation provisions, though sound in theory, had remained largely dormant in practice. With the draft guidelines now on the table, the central bank appears determined to close that gap.
Under the draft guidelines, the Mediation and Dispute Resolution Panel is designed to serve as the primary platform for handling civil disputes between creditors and borrowers in secured lending transactions.
The CBN says the panel is intended to provide a specialized and cost-effective platform for resolving disputes tied to movable asset-backed lending, covering issues around creation, perfection, and enforcement of security interests.
Not every dispute, however, will qualify for the panel’s jurisdiction. Eligibility conditions include the existence of a valid security agreement, a mediation clause recognizing the panel, and proof that the security interest has been registered with the National Collateral Registry.
The guidelines also require parties to demonstrate prior good faith efforts to resolve disputes before approaching the panel, reinforcing the push towards non-adversarial resolution.
Critically, the panel is granted first instance jurisdiction over such disputes, effectively requiring parties to exhaust mediation before pursuing litigation. Both creditors and borrowers are expected to consent to the panel’s authority as part of their lending agreements.
The draft guidelines introduce a structured and time-bound dispute resolution process, with the panel expected to deliver decisions within 90 days of the first hearing. To ensure enforceability, awards issued by the panel will be legally binding and can be enforced in court as consent judgments.
Parties are required to comply with decisions within 30 days, failing which the awards may be registered at the Federal High Court for enforcement.
This provision is particularly notable. It means that a panel ruling will not simply carry moral force—it will carry the full weight of a court judgment if a non-compliant party refuses to act.
Tuesday’s circular does not exist in isolation. The new guidelines were proposed about a month after the CBN directed banks to restrict access to certain banking services for large-ticket borrowers with non-performing loans, as part of efforts to safeguard financial stability.
According to the CBN, borrowers whose loan facilities are classified as non-performing and recorded in the Credit Risk Management System (CRMS) or any licensed private credit bureau will no longer be eligible to access additional credit facilities.
Taken together, the two measures paint a picture of a regulator increasingly focused on reducing credit risk and cleaning up the lending ecosystem—not just at the point of default, but at every stage of the lending lifecycle, including how disputes are handled when things go wrong.
Stakeholders have been given until October 9, 2026, to submit comments on the draft guidelines as part of the CBN’s inclusive policymaking process. Industry observers say the window gives banks, borrowers’ associations, legal bodies, and civil society groups ample time to weigh in—and potentially shape the final form of a policy that could significantly alter how secured lending disputes are settled in Nigeria for years to come.
Whether the mediation panel will ultimately reduce the burden on an already overstretched judiciary while providing faster, cheaper resolution for businesses and lenders remains to be seen.
But with the CBN now pushing formally and publicly for its implementation, the era of going straight to court over a collateral dispute may soon be drawing to a close.
WHAT YOU SHOULD KNOW
The CBN’s proposed Mediation and Dispute Resolution Panel represents a fundamental reset of how loan disputes are handled in Nigeria. The bottom line is this: if you have a secured lending dispute, the courtroom will no longer be your first option — mediation will be mandatory.
With panel decisions legally binding, enforceable as court judgments, and required to be delivered within 90 days, the framework is designed to be both faster and harder to ignore than traditional litigation.
Coming on the heels of the CBN’s recent crackdown on non-performing loan defaulters, this move is part of a broader, deliberate effort by the apex bank to sanitize Nigeria’s credit environment from default to dispute, and stakeholders have until October 9, 2026, to have their say before the rules are set in stone.
