The Central Bank of Nigeria (CBN) has directed all banks with unresolved forbearance exposures to submit detailed Capital Restoration Plans (CRPs) by July 14, 2025, as part of ongoing efforts to strengthen the financial system and transition away from COVID-era regulatory waivers.
This directive was issued following the expiration of all regulatory forbearance waivers on June 30, 2025, including Single Obligor Limits (SOL) and relaxed capital adequacy conditions previously granted to cushion the effects of the pandemic on the banking sector.
According to the CBN, banks are now required to file their CRPs within 10 working days after the end of each quarter, starting with Q2 2025. These plans must outline specific strategies to rebuild capital, improve asset quality, and ensure compliance with regulatory requirements.
“Banks are expected to outline a clear timeline and strategy for restoring capital and provisioning shortfalls,” the apex bank stated in its circular.
Key Requirements for Capital Restoration Plans
The CRPs must include:
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Steps to optimise cost, reduce risk assets, and attract fresh capital;
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Status updates on provisioning, capital adequacy ratios (CAR), and Additional Tier 1 (AT1) capital instruments;
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Disclosure of forbearance-related exposures;
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Commitments to suspend dividends, executive bonuses, and foreign investments until full compliance is achieved.
In a bid to support this transition, the CBN announced a temporary suspension of the cap on AT1 capital recognition in CAR calculations from June 30, 2025, to March 31, 2026. This move is intended to give banks more flexibility to shore up capital buffers during the adjustment period.
Additionally, the central bank has allowed immediate write-offs of fully provisioned non-performing loans (NPLs) without waiting for the previously required one-year period, to accelerate the cleanup of bad loans from bank books.
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Implications for the Banking Sector
The new directive signals a shift toward stricter prudential regulation and increased accountability. Banks that fail to comply risk facing regulatory penalties, restrictions, or possible mergers if capital restoration targets are not met.
Industry analysts say this move will bolster confidence in the banking sector and align Nigeria’s financial regulatory framework with international standards.
The CBN’s action is seen as a necessary step to ensure financial system stability and restore market discipline after years of pandemic-era leniency.
