The Central Bank of Nigeria (CBN) has announced a significant update to the financial regulatory framework, particularly affecting the capital requirements for commercial, merchant, and non-interest banks operating within the country. This move aims to fortify the banking sector against the backdrop of current macroeconomic challenges and enhance its capacity to propel national economic growth.
New Capital Thresholds Set
In a bid to ensure the banking institutions’ resilience and solvency, the CBN has revised the minimum capital requirements as follows:
- Commercial Banks: International operations must now hold a minimum of ₦500 Billion, national banks ₦200 Billion, and regional banks ₦50 Billion.
- Merchant Banks: A standard of ₦50 Billion is set for national operations.
- Non-Interest Banks: National banks are required to have ₦20 Billion, and regional banks ₦10 Billion.
Strategies for Compliance
Banks are encouraged to explore various avenues to meet these new standards, including the injection of fresh equity capital, pursuing mergers and acquisitions, or adjusting their licensing. The CBN has laid out clear pathways for both existing banks and new entrants to align with these changes.
Timelines and Guidelines
Existing banks are given a 24-month window, starting from April 1, 2024, to meet the revised capital requirements. Moreover, they are to strictly observe the minimum Capital Adequacy Ratio (CAR), with non-compliance necessitating immediate capital infusion. New banks or those in the proposal stage must ensure their capital meets the revised standards upon application post-April 1, 2024, with a grace period extending to March 31, 2026, for any pending applications.
Implementation and Oversight
All affected banking institutions are required to submit a comprehensive plan detailing their approach to achieving the new capital targets to the CBN’s Director, Banking Supervision Department, by April 30, 2024. The central bank will closely monitor compliance to ensure adherence within the specified timeline.
Ensuring Stability and Growth
This regulatory enhancement is part of the broader Banking Sector Recapitalization Programme 2024, which aspires to not only safeguard the Nigerian banking sector from economic fluctuations but also to bolster it in support of the country’s journey toward becoming a US$1 trillion economy by 2030. The CBN emphasises that this initiative will not disrupt banking services and assures that depositors’ interests will remain protected throughout this transition.
For further details on the recapitalization programme, the CBN directs stakeholders to the Frequently Asked Questions (FAQs) section on its website, www.cbn.gov.ng, where additional information on compliance, the economic impact, and protective measures for depositors and the economy at large is available.
About the Central Bank of Nigeria
The Central Bank of Nigeria is the nation’s supreme financial regulation authority, responsible for maintaining financial stability and ensuring the integrity of the financial system.