The Central Bank of Nigeria (CBN) yesterday announced that 14 Nigerian banks have successfully met the new minimum capital requirements under its ongoing recapitalisation exercise.
CBN Governor, Olayemi Cardoso, disclosed this while presenting the communiqué of the 302nd Monetary Policy Committee (MPC) meeting in Abuja.
According to him, the milestone reflects “significant progress” in strengthening the financial system, with the MPC urging the apex bank to ensure the exercise is successfully completed.
As part of the new thresholds, commercial banks with international authorisation must now hold N500 billion in capital, those with national licences N200 billion, and regional banks N50 billion. Merchant banks are required to maintain N50 billion, while non-interest banks have a N20 billion threshold for national and N10 billion for regional licences.
The last major recapitalisation in 2004 raised capital bases from N2 billion to N25 billion, sparking industry-wide mergers that cut the number of banks from 89 to 25.
MPC Slashes Interest Rate
The MPC also reduced the Monetary Policy Rate (MPR) by 50 basis points from 27.5% to 27%, marking the first cut in three years. Cardoso explained that the decision was anchored on sustained disinflation for five consecutive months and projections of further declines in inflation through 2025.
The committee further adjusted the Cash Reserve Ratio (CRR) for commercial banks to 45% from 50%, retained that of merchant banks at 16%, and kept the Liquidity Ratio unchanged at 30%. It also introduced a 75% CRR on non-Treasury Single Account (TSA) public sector deposits to tighten liquidity.
“Nigeria’s macroeconomic stability has improved with declining inflation, stable exchange rates, stronger output growth, and robust reserves,” Cardoso said, noting that external reserves rose to $43.05 billion as of September 11, up from $40.51 billion in July, with an import cover of 8.28 months.
Mixed Reactions from Stakeholders
The rate cut has drawn cautious optimism from stakeholders.
The Nigeria Employers’ Consultative Association (NECA) described it as a “welcome move,” citing inflation’s decline to 20.12% in August from 21.88% in July. However, NECA warned that the high CRR and liquidity restrictions could blunt the benefits for businesses.
The Centre for the Promotion of Private Enterprise (CPPE) praised the easing of credit conditions, highlighting the 75% CRR on non-TSA deposits as a safeguard against excess liquidity risks.
The Association of Small Business Owners of Nigeria (ASBON) said the cut signals a policy shift towards growth, but noted that the impact on lending rates and business financing may not be immediate.
Analysts, however, urged caution. David Adonri, Vice Executive Chairman of Highcap Securities Limited, said while the move aligns with disinflation trends, sustainability remains uncertain amid insecurity and global commodity volatility.
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