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CBN ends forbearance measures, asks banks to provide capital restoration plan - THE CABLE
The Central Bank of Nigeria (CBN) has issued a coordinated set of transitional measures to guide banks out of the regulatory forbearance regime introduced during the COVID-19 crisis.
In a circular dated June 20 and signed by Olubukola Akinwunmi, director of banking supervision, the bank said the measures are designed to support affected banks in complying with prudential requirements, while facilitating a smooth and credible exit from temporary regulatory concessions.
CBN ENDS FORBEARANCE MEASURES
Effective June 30, 2025, the CBN said all COVID-19-related forbearance measures — including waivers on single obligor limits (SOL) — will be terminated.
According to the bank, the initiative aims to restore risk sensitivity in credit classification, provisioning, and asset quality assessments.
“Affected banks must align all impacted credit exposures with existing CBN Prudential Guidelines and other relevant regulations,” the circular reads.
“To support asset quality clean-up, the requirement to retain fully provisioned loans for one year before write-off (Section 3.21, Prudential Guidelines 2020) is temporarily waived for forbearance related facilities (Please refer to our email of February 6, 2025 with the Subject; Regulatory Waiver on Write-Off of Forbearance Loans).”
The CBN said lenders can proceed with loan write-offs to lower their non-performing loan (NPL) ratios, as long as they meet internal governance standards for doing so.
AT1 CAPITAL CAP LIFTED TEMPORARILY
To strengthen capital buffers during the transition, the CBN also temporarily lifted regulatory caps on the recognition of additional tier 1 (AT1) capital in the capital adequacy ratio (CAR) computation.
The apex bank said the relief takes effect from June 30, 2025, and will remain in place until March 31, 2026.
“This adjustment is intended to enhance banks’ capital buffers without compromising long-term capital planning,” the bank said.
However, the CBN stressed that the temporary measure is not a substitute for the ongoing recapitalisation programme announced in its March 28 circular.
DIVIDEND, BONUS SUSPENSION FOR BANKS UNDER RELIEF
CBN also announced restrictions on the use of transitional reliefs.
“These restrictions remain in force until capital levels and provisioning are fully restored to regulatory compliance,” CBN added.
QUARTERLY DISCLOSURES, CAPITAL RESTORATION PLANS REQUIRED
In a bid to enhance transparency and regulatory oversight, the CBN directed banks to submit detailed quarterly disclosures, which will include provisioning status and reconciliation of affected credit exposures.
“The submission should reach the Director of Banking Supervision, not later than 10 working days following the end of the quarter with effect from June 30, 2025,” the circular added.
In addition, the regulator asked all affected banks to prepare a comprehensive capital restoration plan, detailing proposed strategies for restoring full compliance.
“Plans submitted will be subject to regulatory review and approval, and will form the basis for continuous supervisory monitoring and engagement throughout the transition,” the apex bank said.
SUPERVISORY ENGAGEMENT AND COMPLIANCE
The regulator also advised banks to demonstrate full commitment to the measures, uphold prudential standards, and contribute to the overall health and resilience of the Nigerian financial system.
