The Central Bank of Nigeria has intensified its regulatory oversight of the banking sector, issuing a comprehensive directive that signals the final phase of the country’s exit from pandemic-era financial accommodations.
In a circular released Monday and signed by Olubukola Akinwunmi, CBN Director of Banking Supervision, the apex bank has mandated all banks operating under regulatory forbearance to submit detailed capital restoration plans by the 10th working day following the end of each quarter, beginning June 30, 2025.
The directive represents a significant tightening of regulatory requirements as the CBN terminates all COVID-19-related regulatory forbearance and waivers on Single Obligor Limits effective June 30, 2025, marking the end of nearly five years of pandemic-era financial accommodations that allowed banks greater flexibility in their operations.
Under the new framework, affected banks must present comprehensive strategies detailing how they plan to restore full regulatory compliance. These plans must encompass cost optimization initiatives, risk asset reduction measures, significant risk transfers, and necessary business model adaptations. The CBN has made clear that these restoration plans must cover the entire period until full normalization of capital and asset quality indicators is achieved.
The central bank’s approach combines punitive measures with supportive frameworks. Banks under forbearance face immediate restrictions on dividend payments, executive bonuses, and investments in foreign subsidiaries. However, the CBN has also provided some relief measures, including temporarily lifting regulatory caps on Additional Tier 1 (AT1) capital recognition in Capital Adequacy Ratio calculations from June 30, 2025, to March 31, 2026.
To facilitate asset quality improvement, the CBN is temporarily waiving the one-year retention rule on fully provisioned loans related to forbearance, enabling banks to write them off immediately and reduce their non-performing loan ratios.
The regulatory framework also introduces enhanced transparency requirements. Beginning June 30, 2025, banks must provide quarterly disclosures on key metrics, including detailed provisioning status, Capital Adequacy Ratio calculations with and without transitional reliefs, classification migration data for restructured loan facilities, and comprehensive disclosure of Additional Tier 1 instruments.
This development comes as the Nigerian banking sector undergoes significant transformation, with the CBN having raised minimum capital requirements for banks in March 2024. The current measures appear designed to ensure that banks not only meet these new capital thresholds but do so through sustainable business practices rather than temporary accommodations.
The CBN’s firm stance reflects broader concerns about macro-financial stability in Africa’s largest economy, where the banking sector plays a crucial role in supporting economic growth. By ending forbearance arrangements while providing structured pathways for compliance, the central bank aims to restore full risk sensitivity in credit classification and provisioning while maintaining system stability.
All submitted capital restoration plans will be subject to rigorous regulatory review and approval, forming the foundation for continuous supervisory monitoring throughout the transition period. This approach suggests the CBN is taking a hands-on role in ensuring banks develop credible, sustainable strategies for regulatory compliance rather than simply meeting minimum requirements.
The measures collectively represent what the CBN describes as “a firm but supportive framework for the final phase of exiting the regulatory forbearance regime,” emphasizing the central bank’s commitment to responsible banking practices and maintaining prudential standards across Nigeria’s financial system.
WHAT YOU SHOULD KNOW
Nigeria’s Central Bank is ending COVID-19 banking accommodations and getting tough on financial institutions. Banks that received pandemic-era relief must submit detailed plans showing exactly how they’ll meet full regulatory standards again.
The CBN is simultaneously restricting dividend payments and bonuses for struggling banks while demanding quarterly transparency reports. This represents the final phase of returning Nigeria’s banking sector to pre-pandemic regulatory strictness, with the central bank closely monitoring each institution’s path back to compliance.
