CBN proposes mediation panel to resolve loan disputes

The Central Bank of Nigeria (CBN) has proposed the establishment of an independent mediation panel to handle disputes between financial institutions and their customers, in a move aimed at reducing reliance on lengthy court processes.

The proposal, outlined in a circular released on Wednesday, seeks to introduce a structured alternative to litigation by adopting Alternative Dispute Resolution methods for resolving loan-related conflicts.

According to the apex bank, the panel will address issues such as loan agreements, interest rate disagreements, and collateral disputes, with a mandate to deliver decisions within 90 days of the first hearing.

The CBN said the initiative is designed to lower legal costs for borrowers and banks, preserve business relationships, and ease the burden on Nigeria’s judicial system by diverting commercial cases away from the courts.

Under the proposed framework, parties will first be required to demonstrate efforts to resolve disputes through informal channels, including internal bank complaint systems, before approaching the mediation panel.

A senior CBN official noted that the initiative is intended to promote fairness and efficiency within the financial sector, adding that disputes should not automatically escalate into prolonged legal battles.

The move follows a recent directive by the regulator aimed at tightening measures against loan defaulters, signaling a broader effort to balance enforcement with accessible dispute resolution mechanisms.

The CBN has opened the draft guidelines for public consultation, inviting stakeholders, including legal practitioners, financial experts, and consumer groups to submit feedback by October 9, 2026.

Once implemented, the mediation panel is expected to complement the bank’s existing CBN Consumer Protection Department, strengthening oversight and improving confidence in Nigeria’s banking system.