CBN to increase capital requirement of banks

Date:

Commercial banks in the country may be required to increase their capitalisation in coming months.

Governor of the Central Bank of Nigeria (CBN), Yemi Cardoso, hinted at this last night at the 58th Annual Bankers Dinner in Lagos.

Cardoso highlighted the economic agenda of President Bola Ahmed Tinubu, including raising the output level to $1 trillion, saying there is doubt Nigerian banks have the adequate capital requirements to fund such economy.

“It is crucial to evaluate the sufficiency of the banks,” he said, noting that the CBN will be directing banks to increase their capital base.

The revised capital requirements are set to be implemented in phases, affording banks a reasonable timeline to adjust and meet the new standards. This gradual approach is designed to minimize disruptions while ensuring that financial institutions have ample time to raise the necessary capital through various channels, including retained earnings and external funding sources.

Financial experts have applauded the CBN’s decision, emphasizing the positive impact it could have on the Nigerian banking sector and the broader economy. Increased capital requirements are expected to bolster depositor confidence, attract foreign investment, and create a more resilient banking sector capable of withstanding economic uncertainties.

Analysts predict that this move will result in more prudent risk management practices among banks, as institutions will be compelled to reassess their capital adequacy and adjust their lending and investment strategies accordingly. This, in turn, is anticipated to reduce the likelihood of financial crises and enhance the overall stability of the banking sector.

As the CBN takes proactive measures to fortify the financial system, stakeholders will closely monitor the implementation of the new capital requirements and their impact on the banking industry. With Governor Yemi Cardoso at the helm, the Central Bank of Nigeria remains committed to fostering a sound and stable financial environment that propels the nation towards sustainable economic growth.

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