An investment banker and development expert, Nnaemeka Obiaraeri, has called on the Central Bank of Nigeria (CBN) to strengthen its consumer protection framework to safeguard depositors’ funds, arguing that the regulator must apply the same rigor to banks that it uses in pursuing delinquent borrowers.
In a statement issued on March 12, 2026, Obiaraeri said the apex bank’s recent directive targeting large borrowers with non-performing loans is a step in the right direction, but warned that stronger oversight of commercial banks is needed to prevent abuse of the financial system.
The CBN had recently instructed banks to deny certain banking services and additional credit facilities to borrowers with non-performing loans, part of a broader effort to curb rising loan defaults and restore discipline in the banking sector.
While endorsing the policy’s objective, Obiaraeri said the regulator must also ensure that commercial banks are held accountable in disputes involving customers’ funds.
“The CBN is right to insist that neither banks nor customers play games with the system,” he said. “But it must also exercise its authority as banker to the banks to protect depositors with the same determination it applies when pursuing loan defaulters.”
According to him, weaknesses in Nigeria’s financial policy environment have created opportunities for banks to exploit regulatory gaps, particularly in disputes involving customers’ deposits.
Obiaraeri said banks sometimes take advantage of lengthy judicial processes to delay returning funds to customers, often initiating litigation that can drag on for months or even years.
“As a consultant, I know of several cases where the CBN intervened through its Consumer Protection Department and advised banks to return funds taken from customers,” he said. “Some of those cases still linger despite regulatory intervention.”
The economist attributed the delays partly to limited institutional capacity within the central bank’s consumer protection structure.
To address this, he proposed a significant expansion of the CBN’s Consumer Protection Department, suggesting it be staffed with at least 300 personnel to enable faster investigation and resolution of disputes between banks and customers.
He also advocated a shift toward time-bound regulatory intervention. Under his proposal, once the CBN steps into a dispute involving a commercial bank and a customer, the case should be resolved within two weeks.
Such a framework, he said, would prevent what he described as the bureaucratic stalemate that leaves customers stranded while disputes remain unresolved for extended periods.
“Customers cannot wait indefinitely while banks and regulators deliberate,” Obiaraeri said. “There should be fixed timelines for regulatory decisions once the central bank intervenes.”
He also proposed what he described as a stronger enforcement mechanism aimed at deterring misconduct by financial institutions.
In cases where banks are found to be deliberately frustrating customers or manipulating regulatory processes, Obiaraeri said the CBN should consider removing the board and management of the affected institution, treating the issue as a corporate governance failure.
“The CBN has statutory powers to intervene decisively when necessary,” he said. “If it can take firm action against loan defaulters, it should also apply similar discipline to banks that game the system.”
Another proposal advanced by Obiaraeri involves the adoption of a “pay-first” model for disputes involving customer funds.
Under this approach, once the CBN rules in favor of a customer, the disputed amount would be immediately deducted from the bank’s account held with the central bank and reserved pending the final outcome of any legal proceedings.
Such a mechanism, he said, would prevent banks from continuing to benefit from funds under dispute during protracted litigation.
The economist said stronger consumer protection would help restore trust in the banking system and improve the effectiveness of financial intermediation in the economy.
According to him, the credibility of Nigeria’s banking sector has direct implications for national productivity, particularly for manufacturers and private businesses that depend on efficient financial services.
“If banks fail to perform their intermediation role effectively, businesses cannot thrive,” Obiaraeri said.
He added that a more balanced regulatory approach is essential if Nigeria is to achieve the $1 trillion economic target set by President Bola Ahmed Tinubu.
For that goal to be realized, Obiaraeri said, the banking sector must evolve from what he described as a predatory model to one that actively supports business expansion, investment and job creation.
“Banks should function as facilitators of productivity,” he said, “not as obstacles to economic growth.”