FRI, MAR 29 2024-theGBJournal| The Central Bank of Nigeria (CBN) has raised the minimum capital requirements for commercial, merchant and non-interest banks in the Nigeria.
The CBN based its decision to raise the requirements on the prevailing macroeconomic challenges and headwinds occasioned by external and domestic shocks.
It said in a circular on Thursday that the challenges underscores the need for banks to raise and maintain adequate capital to enhance their resilience, solvency and capacity to continue to support the growth of the Nigerian economy.
Under the new capital adequacy arrangement, Commercial banks with International presence are now required to raise their capital base to N500 billion ($353.32 million) (previously N50 billion).
Minimum capital requirement for those operating as National banks is now set at N200 billion from N25 billion while those operating as Regional banks are required to raise their capital base to N50 billion from N10 billion.
Similarly, the CBN set the new minimum capital requirement for Merchant banks at N50 billion while non-interest banks operating on National and Regional levels are to have minimum of N20 billion and 10 billion as their capital base respectively.
The CBN noted among others, that the newly specified minimum capital shall comprise of paid-up capital and share premium only, and shall not be based on shareholders’ Fund.
It said additional Tier 1 (AT1) Capital shall not be eligible for the purpose of meeting the new requirements and all banks are required to meet the minimum capital requirement within a period of 24 months commencing from April 1, 2024 and terminating on March 31,2026.
For proposed banks, the minimum capital requirement shall be paid-up capital, and applicable to all new applications for banking license submitted after April 1, 2024.
The CBN said it shall continue to process all pending applications for banking license for which capital deposit had been granted.
It added that the promoters of such proposed banks shall make up the difference between the capital deposited with the CBN and the new capital requirement not later than March 31, 2026.
”To meet the minimum capital requirements, banks may consider injecting fresh equity capital through private placements, rights issue and/or offer subscription, mergers and acquisitions, and/or upgrade or downgrade of license authorization,” the CBN suggested.
The CBN consequently directed all banks to submit an implementation plan, ”clearly indicating the chosen option(s) for meeting the new capital requirement and various activities involved with their timelines.”
”The plan shall be submitted to the Director, Banking Supervision Department, Central Bank of Nigeria, not later than April 30, 2024,” the CBN said.
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