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CBN raises minimum capital requirements for banks to N500 bln, sets March 2026 deadline

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By Oludare Mayowa

The Central Bank of Nigeria (CBN) on Thursday announced a substantial increase in the minimum capital requirements for banks operating within the country and set March 31, 2026 deadline for commercial lenders to meet the requirements.

This move aims to fortify the financial sector and ensure its resilience amidst evolving economic dynamics.

In a circular issued by the Director of Financial Policy and Regulation Department, Haruna Mustafa, regulatory bank’s new minimum capital base requirementCBN, varies across different categories of banks:

Banks with international authorization are now mandated to maintain a minimum capital base of N500 billion.Commercial banks with national authorization face an eightfold increase, with the minimum capital requirement raised to N200 billion from the previous N25 billion.

Banks with regional authorization now require a minimum capital base of N50 billion, compared to the prior N10 billion.Merchant banks are required to maintain a minimum capital base of N50 billion.

Non-interest banks with national and regional authorizations face new minimum capital requirements of N20 billion and N10 billion, respectively.

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These new requirements are set to take effect on April 1, 2024, with banks given a two-year window for compliance, necessitating them to meet the minimum capital base by March 31, 2026.

“All banks are required to meet the minimum capital requirement within a period of 24 months commencing from April 1, 2024 and terminating on March 31, 2026,” Mustafa wrote in thte circular released on Thursday.

The CBN has outlined several strategies for banks to achieve compliance, including raising additional capital through private placements, rights issues, or public offerings. Additionally, consolidation through mergers and acquisitions (M&A) is presented as an avenue for meeting the heightened capital requirements. Banks may also opt to downgrade or upgrade their licenses to align with the new capital requirements.

It’s crucial to note that meeting the minimum capital requirement isn’t the sole focus; banks must also maintain the minimum capital adequacy ratio (CAR) mandated for their specific license authorization. Failure to comply with the CAR could necessitate mandatory capital injections to rectify the bank’s position.

These new regulations not only apply to existing banks but also to all new applications for banking licenses submitted after April 1, 2024. The CBN has specified that promoters of proposed banks must bridge the gap between their deposited capital and the new requirement by March 31, 2026.

Furthermore, the CBN requires all banks to submit an implementation plan by April 30, 2024, outlining their chosen approach to meeting the new requirements and the timeline for each step. The regulatory body has affirmed its commitment to monitoring banks to ensure compliance within the specified timeframe.

This move by the CBN reflects a proactive approach to bolstering the Nigerian banking sector amidst the evolving economic landscape, aiming to ensure its robustness and stability in the face of potential challenges.

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