CBN Increases the Minimum Capital Requirements for Banks

CBN increases the minimum capital requirements for banks. The Central Bank of Nigeria just last Thursday increased the minimum capital requirements for banks.

CBN Increases Minimum Capital Requirements for Banks

CBN Increases Minimum Capital Requirements for Banks

According to Techpoint, The Central Bank of Nigeria (CBN) is tightening the requirements for commercial banks with international, national, and regional authorization.

Now, banks with international authorization need to have a whopping ₦500 billion in their reserves, while those with national authorization must have at least ₦200 billion. Regional banks are required to have a minimum of ₦50 billion.

Merchant banks are also facing higher thresholds, with a minimum requirement of ₦50 billion, while non-interest banks need ₦20 billion for national authorization and ₦10 billion for regional.

Deadline for Banks to Meet Up With the Set Requirements

But here’s the kicker: these aren’t just suggestions – they’re deadlines. All banks have a 24-month window, from April 1, 2024, to March 31, 2026, to meet these new requirements. The aim is to ensure that Nigeria’s banks have enough financial resources to continue supporting the economy.

How Banks Can Comply With the New Directives

So, how can banks comply? The CBN suggests raising new equity capital through private placements or rights issues, merging with other banks, or adjusting their license status. Importantly, the new capital must consist solely of paid-up capital and share premiums – no funny business with additional Tier 1 Capital allowed.

And if a bank falls short of the capital adequacy ratio requirement, it’ll need to inject more capital to meet the standard.

What about new banks? They need to come prepared with significant capital too. Any new applications for banking licenses after April 1, 2024, must meet the new capital requirements upfront, with a deadline of March 31, 2026, to comply.

What Banks Should Know About the New Directives

But don’t fret – the CBN isn’t leaving banks to fend for themselves. They have until April 30, 2024, to submit a plan detailing how they’ll meet the new requirements. And rest assured, your money is safe.



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