The Central Bank of Nigeria (CBN) has intensified its enforcement of banking regulations, requiring lenders to maintain capital levels that reflect their risk exposure while tightening controls on insider lending, corporate governance, and large loans. The Director of Banking Supervision at the CBN, Dr Olubukola Akinwunmi, disclosed this at the 37th Finance Correspondents Association of Nigeria (FICAN) Conference in Abuja.
Risk-Based Capital Framework Introduced in March 2026
Akinwunmi said the regulator's risk-based capital framework, introduced in March 2026, was designed to strengthen banks following the recent recapitalisation exercise and reduce the likelihood of another industry-wide capital-raising exercise. He explained that the framework moves beyond a uniform minimum capital requirement by considering each bank's business model and risk profile.
Under the policy, lenders with greater exposure to potential losses must maintain sufficient capital to withstand financial shocks. The framework, anchored on Sections 13 and 63 of the Banks and Other Financial Institutions Act (BOFIA), requires stress tests covering risks such as foreign exchange exposure, concentrated lending, deteriorating loan quality, and governance failures.
Stricter Scrutiny on Insider Lending and Corporate Governance
Akinwunmi said insider-related lending would attract particularly strict scrutiny because of its potential to weaken banks' financial positions. He added that the CBN was strengthening corporate governance oversight by examining the qualifications, experience, and integrity of bank directors and senior executives. According to him, weak board supervision, reckless lending, insider abuses, and ineffective internal controls have contributed to banking failures in Nigeria and elsewhere.
The CBN director said the regulator was enforcing its Insider Credit Circular issued in February 2025, with some bank owners, shareholders, and board members leaving their positions amid concerns over insider lending. He warned that continued violations could affect the eligibility of certain individuals to serve on bank boards.
Limit on Foreign Subsidiary Investments and Prudential Rules
Akinwunmi also clarified that the CBN had not introduced a new restriction preventing Nigerian banks from expanding into other African countries. Instead, he said, the regulator was enforcing an existing rule limiting investments in foreign subsidiaries to 10% of a bank's shareholders' funds. The CBN wants banks to comply strictly with the requirement and avoid exposing newly raised capital to excessive offshore investment risks.
He added that the regulator had tightened enforcement of single obligor limits, loan diversification requirements, and other prudential rules following the withdrawal of previous regulatory forbearances.
Digital Tools and AI to Enhance Bank Supervision
Akinwunmi disclosed that the CBN had introduced a digital Supervisory Examination Application to improve bank inspections and make supervisory decisions more transparent. The platform will allow examiners to conduct much of their work digitally and create records showing how assessments and regulatory decisions were reached.
It will also help preserve the experience of retiring examiners, with artificial intelligence-enabled tools potentially making their expertise available to younger supervisors. The CBN is also deploying digital tools, artificial intelligence, and data analytics to improve bank supervision, protect depositors, and prevent financial instability.
