Central Bank of Nigeria Unveils Plan for Loan Dispute Mediation Panel

The Central Bank of Nigeria (CBN) has put forth a proposal for the establishment of a mediation panel tasked with handling disputes concerning loans. This initiative seeks to lessen the dependency on traditional court proceedings for resolving issues related to secured lending transactions.

The proposition was detailed in a circular released by the apex bank, signed by P. I. Oluikpe, who serves as the Acting Director of the Development Finance Advisory Department. The circular extended an invitation to stakeholders to review draft guidelines for setting up a Mediation and Dispute Resolution Panel, operating under the framework of Secured Transactions in Movable Assets.

According to the CBN, the proposed Panel is intended to have exclusive first- instance jurisdiction over any disagreements stemming from the application and execution of the relevant Act, thereby excluding the involvement of any court or legal body in Nigeria.

The CBN highlighted that this project is designed to bolster the nation's financial ecosystem by offering a specialised and economically viable avenue for settling disputes linked to loans that are collateralised by movable assets.

"The Central Bank of Nigeria is in the process of developing guidelines and operational procedures for a Mediation and Dispute Resolution Panel," the circular stated. This effort is fundamentally based on the Secured Transactions in Movable Assets Act, which designates mediation as the primary method for dispute resolution between creditors and borrowers.

The bank elaborated that the guidelines aim to foster a structured and efficient system for managing these disagreements, while simultaneously enhancing confidence in the realm of asset-backed lending. The CBN emphasised that a core objective of the MDRP guidelines is to institute a clear and standardised protocol for addressing STMA-related disputes, ensuring fairness, transparency, and efficiency throughout the process.

Within the proposed structure, the panel will employ alternative dispute resolution techniques and is projected to issue decisions within a 90-day period from the commencement of the first hearing. A prerequisite for parties involved is to consent to the panel's jurisdiction and demonstrate that informal resolution attempts were made before escalating the matter.

"Parties will be required to provide evidence of their efforts to resolve the dispute through informal channels, such as negotiations, prior to bringing the case before the Panel," the document indicated.

The panel is planned to comprise professionals with at least a decade of experience in fields such as law, banking, finance, and dispute resolution. The CBN intends to appoint a total of 30 members, with smaller panels of three individuals to be formed on a rotating basis for specific cases.

Decisions rendered by the panel will carry legal weight and will be enforceable through the courts. The document noted that "The award shall be legally binding on the parties and enforceable in court as a consent judgment or consent award." Nevertheless, parties will retain the option to appeal panel decisions on specific legal grounds, within stipulated timeframes.

Furthermore, the framework places a strong emphasis on confidentiality, stipulating that all proceedings and information shared must be kept private. The funding for the panel is expected to be derived from CBN allocations, administrative fees, and other contributions, with stakeholders being invited to submit their feedback by the deadline of October 9, 2026.

This development follows recent actions taken by the CBN to reinforce credit discipline. These measures have included issuing directives that restrict access to banking services for individuals or entities with non-performing loans, as part of broader strategies to maintain the stability of the financial system.