CBN to Establish Mediation Panel for Movable Asset Loan Disputes
By Patience Ikpeme
The Central Bank of Nigeria (CBN) has initiated plans to establish a specialized mediation panel to act as the primary arbiter for loan disputes, aiming to minimize immediate legal battles over secured lending.
The proposal seeks to provide a streamlined alternative to the court system for conflicts arising from lending backed by movable assets.
In a circular released on Tuesday, the apex bank invited stakeholders to provide input on draft guidelines for the creation of the Mediation and Dispute Resolution Panel (MDRP).
The document, signed by the Acting Director of the Development Finance Advisory Department, P. I. Oluikpe, outlines a framework where the panel takes precedence over traditional litigation in specific financial disagreements.
“The Panel shall, to the exclusion of any court of law or body in Nigeria, exercise first instant jurisdiction to hear and determine any dispute arising from the operation and application of the Act,” the CBN stated.
This initiative forms part of a broader strategy to refine the financial ecosystem and ensure that disputes involving movable collateral—such as equipment, inventory, or accounts receivable—are handled through a dedicated mechanism. The bank described the proposed body as a “specialized, cost-effective platform for resolving disputes arising from creation, perfection and enforcement of security interests in movable assets.”
The legal foundation for this move is the Secured Transactions in Movable Assets (STMA) Act of 2017, which mandates the panel as the first port of call for mediation between creditors and borrowers. By implementing these guidelines, the CBN intends to foster a structured system that increases transparency and trust in the credit market.
“The key objective of the MDRP guidelines is to establish a clear and standardised procedure for managing STMA-related disputes, while ensuring transparency, fairness and efficiency,” the apex bank said.
Under the draft rules, the panel will focus on alternative dispute resolution (ADR) techniques designed to maintain professional relationships while securing rapid outcomes. The guidelines set a strict timeline for these proceedings, requiring the panel to deliver a decision within 90 days of the first hearing.
To access this platform, parties must show they attempted to settle their differences privately before seeking formal intervention. “Parties shall demonstrate that they had made efforts to resolve the dispute through other informal means such as negotiations before escalation to the Panel,” the document noted.
Eligibility for the mediation process depends on the existence of a valid security agreement that includes a mediation clause and is registered with the National Collateral Registry. The panel itself will consist of 30 professionals drawn from the legal, banking, and finance sectors, each possessing a minimum of 10 years of experience. These members will serve on three-person rotating committees, supported by a dedicated administrative secretariat.
Hearings are expected to be flexible, with provisions for in-person, virtual, or hybrid sessions. Once a decision is reached, it carries significant legal weight. “The award shall be legally binding on the parties and enforceable in court as a consent judgment or consent award,” the CBN stated, though it noted that appeals remain possible on limited legal grounds.
The funding for the MDRP will be sourced through CBN subventions, administrative fees from the disputing parties, and other external contributions.
This policy push follows a significant regulatory action taken last month to curb credit risk. In a letter dated March 12, 2026, signed by the Director of Banking Supervision, Olubukola Akinwunmi, the CBN ordered banks to restrict services for large-scale borrowers with non-performing loans (NPLs). That directive barred chronic defaulters from accessing new credit, a measure intended to improve risk management and credit discipline across the industry.
Stakeholders have until October 9, 2026, to submit their comments and suggestions on the new mediation guidelines to the apex bank.
