In a move to strengthen the Nigerian banking sector, the Central Bank of Nigeria (CBN) announced a significant increase in the minimum capital requirements for all commercial, merchant, and non-interest banks.
The CBN cited prevailing economic challenges as the reason behind the policy change. They believe these higher capital requirements will enhance banks’ resilience and capacity to support the country’s economic growth.
Breakdown of New Minimums:
- Commercial Banks:
- International License: ₦500 billion (up from previous requirement)
- National License: ₦200 billion (up from previous requirement)
- Regional License: ₦50 billion (up from previous requirement)
- Merchant Banks:
- National License: ₦50 billion (up from previous requirement)
- Non-Interest Banks:
- National License: ₦20 billion (up from previous requirement)
- Regional License: ₦10 billion (up from previous requirement)
Implementation Timeline:
Banks are granted a 24-month grace period, from April 1, 2024 to March 31, 2026, to meet the new capital requirements. The CBN suggests several methods for banks to achieve this, including issuing new shares, merging with other institutions, or downgrading their licenses.
Additional Requirements:
- The minimum capital amount refers only to a bank’s readily available funds, excluding future profits or intangible assets.
- Existing minimum capital adequacy ratio (CAR) requirements remain in place for all banks.
- New banks applying for licenses after April 1, 2024, must meet the increased minimums.
- Existing applications in process need to fulfill the funding gap between previously deposited capital and the new requirement by March 31, 2024.
Banks must submit an implementation plan to the CBN by April 30, 2024, outlining their chosen strategy for meeting the new capital requirements. The CBN will closely monitor compliance throughout the implementation period.
Credit: Thecable.ng
