BOFIA 2020 §19 — Insider Lending Restrictions

The regulation in brief

BOFIA 2020 §19 sets statutory limits on credit facilities granted by a bank to its directors, officers, significant shareholders, and any entity in which any of those parties holds a material interest. Restrictions cover both direct exposure (a loan to a director personally) and indirect exposure (a loan to a company a director controls). The Act requires board-level approval pathways for any such lending and mandates regular reporting to the CBN. Breaches are a personal-liability matter for the institution's directors.

For most MFBs and finance companies, the practical compliance burden is constant: identifying who counts as an insider at any given moment, tracking the chain of ownership through related parties, capturing exposure across multiple credit products, and producing a defensible record for examination.

How FinovaMax handles it

• Insider register, maintained as a first-class object in the platform. Directors, officers, significant shareholders, and their declared related parties are tagged at the customer-record level — not as a side spreadsheet.
• Automated detection at loan origination. When a credit application is initiated, the platform checks the applicant (and any guarantors or related entities) against the insider register before the application can progress to approval.
• Board-level approval workflow. Insider credit cannot route through the standard approval chain. The platform forces a documented board-approval pathway with audit-evidence capture (who approved, when, on what basis).
• Exposure caps and real-time monitoring. Aggregate insider exposure is tracked against statutory and institution-set limits. Breaches surface on the compliance dashboard, not at month-end.
• Reporting on demand. The insider-lending return required by the CBN is generated from live platform data, not reassembled from spreadsheets.

Practical implication for your institution

The Head of Compliance no longer has to manually cross-reference every new credit application against a director list. The platform does it before the application reaches the credit officer's queue. The CBN examination question "Show me your insider-lending controls" has a defensible, evidence-based answer: every action logged, every approval traceable, every threshold breach surfaced and resolved.