Beginning on June 30, 2025, the Central Bank of Nigeria (CBN) has instructed all banks to submit a comprehensive Capital Restoration Plan within 10 working days following the end of each quarter as part of its larger plan to stabilize the financial system and phase away pandemic-era reliefs.
The CBN emphasized that it wants to see cost-cutting strategies, asset quality improvements, potential risk transfers, and longer-term business strategy adjustments in each bank’s capital restoration plan, which must outline how the bank plans to return to full regulatory compliance.
The new guidelines, which were part of the central bank’s continuous efforts to terminate the regulatory forbearance framework established during the COVID-19 crisis, were described in a circular posted on the CBN’s website yesterday and signed by Dr. Olubukola Akinwunmi, Director of Banking Supervision.
According to the CBN, the transitional framework is intended to assist impacted banks in regaining complete prudential compliance while advancing macrofinancial stability.
The circular stated that, as of June 30, 2025, all regulatory forbearance and waivers pertaining to Single Obligor Limits (SOL) from the COVID-19 era will be terminated. Restoring risk sensitivity in credit classification and provisioning is the stated goal of this.
The apex bank has temporarily removed the rule that banks hold fully provisioned loans for a year prior to write-off in order to facilitate asset quality cleanup. This allows impacted banks to reduce non-performing loans (NPLs) more quickly.
Furthermore, from June 30, 2025, to March 31, 2026, the regulatory restrictions on Additional Tier 1 (AT1) capital recognized in the calculation of the Capital Adequacy Ratio (CAR) have been temporarily removed. Nonetheless, the CBN made it clear that this action is “not a substitute” for the ongoing recapitalization effort that was declared in March.
It said: “The Central Bank of Nigeria (CBN) hereby communicates a coordinated set of transitional measures in keeping with its commitment to protect the stability of the financial system and ensure a credible and orderly exit from the regulatory forbearance regime introduced during the COVID-19 crisis.” These steps are intended to help impacted banks adhere to prudential standards and enable a seamless withdrawal from short-term regulatory exemptions.
Regarding the capital restoration plan, it said: “With effect from June 30, 2025, all affected banks must prepare and submit a comprehensive Capital Restoration Plan to the CBN by the tenth working day after the end of the quarter in order to supplement the aforementioned measures and ensure forward-looking capital planning.”
The strategy should outline the management’s suggested tactics for regaining complete regulatory compliance, such as risk asset reduction, cost optimization projects, major risk transfers, and required business model adjustments, among other things.
The entire time frame until capital and asset quality indicators are fully normalized must be covered by the strategy. The submitted plans will serve as the foundation for ongoing supervisory monitoring and involvement during the transition and will be subject to regulatory evaluation and approval.
Additionally, it said in instructions given for immediate implementation and complete compliance: “All COVID-19-related regulatory forbearance and waivers on Single Obligor Limits (SOL) shall be revoked as of June 30, 2025. Restoring risk sensitivity in asset quality evaluations, provisioning, and credit categorization is the goal of this stage.
All impacted credit exposures must be aligned by affected banks with current CBN Prudential Guidelines and other pertinent rules.
“The requirement to hold fully provisioned loans for a year prior to write-off is temporarily waived for forbearance-related facilities in order to support asset quality cleanup.” If internal governance standards are satisfied, banks may move forward with write-offs to lower their Non-Performing Loan (NPL) ratios.
Regarding limitations on the use of transitional reliefs, it was also mentioned that banks who receive these concessions must closely comply to the suspension of dividend payments in order to guarantee that retained earnings are preserved for capital strengthening and systemic risk mitigation.
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Additionally, it stated that investments in overseas subsidiaries and incentives given to directors and senior management, as specified in the CBN’s June 13, 2025, circular, were to be halted.
It stated that until capital levels and provisioning are completely brought back into line with regulations, these limitations would continue in effect.
“With effect from June 30, 2025, all banks must provide the following quarterly statements in order to enhance supervisory supervision and encourage regulatory transparency: Reconciliation of the impacted credit exposures and a detailed provisioning status.
CAR computations with and without reliefs for transitions. Data on classification migrations for loan facilities that have been impacted or restructured. thorough explanation of AT1 instruments, covering usage, terms of issuance, and associated circumstances. With effect from June 30, 2025, the submission must be received by the Director of Banking Supervision no later than ten working days after the quarter’s conclusion, the CBN stated.
For assistance during the transition, the CBN advised all impacted institutions to maintain constant communication with its Banking Supervision Department. Additionally, it stated that it anticipates banks would fully adopt the measures, adhere to strict risk management procedures, and support the development of stability and confidence in the financial system.
