The Central Bank of Nigeria (CBN) has sparked fresh debate in the financial sector with a bold proposal that could fundamentally change how lending disputes are handled in the country.
In a circular issued on Tuesday, April 14, 2026, the apex bank directed that creditors and borrowers involved in collateral-backed loans must first submit their disputes to a newly proposed Mediation and Dispute Resolution Panel before approaching the courts.
The draft guidelines, which are now open for public comments until October 9, 2026, position the panel as the first point of call for resolving conflicts arising from the creation, perfection, and enforcement of security interests in movable assets under the Secured Transactions in Movable Assets Act, 2017.
According to the CBN, the panel will have exclusive first-instance jurisdiction over such disputes, with the power to interpret relevant laws and regulations, including the UNCITRAL Model Law. Parties will be required to consent to the panel’s authority as part of their lending agreements.
The framework introduces a strict 90-day resolution window, with the panel expected to deliver decisions within that period. Awards issued by the panel will be legally binding and enforceable in court as consent judgments. Parties must comply within 30 days, or the award can be registered at the Federal High Court for enforcement. Appeals will be allowed only on points of law or mixed law and fact, and must first pass through a High Court review before reaching the Court of Appeal.
The CBN says the initiative is designed to provide a specialised, cost-effective, and faster alternative to litigation, which is often lengthy and expensive. It aims to improve confidence in the secured lending ecosystem, encourage more lending to businesses, and reduce the burden on the court system.
However, the proposal has already ignited controversy. Critics argue that forcing parties into mediation before court action could favour powerful lenders and delay justice for borrowers, especially small businesses and individuals who may lack the resources to navigate complex mediation processes. Some legal experts question whether the panel’s “exclusive first-instance jurisdiction” might infringe on the constitutional right of access to the courts.
The timing of the directive is particularly sensitive. It comes barely a month after the CBN instructed banks to restrict banking services including new credit facilities, letters of credit, and performance bonds for large-ticket borrowers with non-performing loans. That earlier move was widely seen as a crackdown on chronic defaulters.
Many now wonder whether the new mediation panel is intended to shield banks from aggressive litigation by borrowers or to create a more balanced and efficient dispute resolution system. Supporters argue it will reduce the backlog of cases in the courts and promote faster, less adversarial resolutions, while opponents fear it could be used to protect powerful interests at the expense of weaker parties.
The CBN has invited stakeholders to submit comments on the draft guidelines, signalling an attempt at inclusive policymaking. The outcome of this consultation could significantly reshape how lending disputes are resolved in Nigeria and influence the level of trust between banks, borrowers, and the regulator.
As the banking sector continues its massive recapitalisation exercise and grapples with rising non-performing loans, the proposed mediation panel represents a critical test of the CBN’s ability to balance financial stability with fairness and access to justice.
The coming weeks will reveal whether this initiative is a genuine step toward a more efficient dispute resolution system or another layer of protection for an already powerful banking industry.
