•CBN Governor Yemi Cardoso
The Central Bank of Nigeria (CBN) on Tuesday announced that sixteen banks have already met the new capital requirements.
Speaking at the end of the Monetary Policy Committee (MPC) meeting on Tuesday in Abuja, Olayemi Cardoso, the governor of the Central Bank of Nigeria (CBN), said the recapitalisation exercise was unfolding smoothly and in line with expectations, reports Daily Independent.
“We are monitoring developments, and indications show the process is moving in the right direction,” he told journalists.
As at April 2025, Nigeria had 44 deposit-taking banks comprising seven commercial banks with international authorisation, 15 with national authorisation, four with regional authorisation, four non-interest banks, six merchant banks, seven financial holding companies and one representative office.
Cardoso said the recapitalisation drive would strengthen banks operating within and outside Nigeria.
“We are building a financial system that will be fit for purpose for the years ahead. Many Nigerian banks now operate across Africa and have been innovative across different markets. These new buffers will better equip them to manage risks in the multiple jurisdictions where they operate,” he said.
He added that the benefits would be felt broadly across the economy. “Ultimately, these benefits Nigerians—our traders, our businesses and our citizens—who operate across those regions. It should give everyone comfort to know that Nigerian banks with deep local understanding are present to support them. Commercial banks are also creating their own buffers through the ongoing recapitalization.”
Announcing the outcome of the MPC meeting, Cardoso said all 12 members were in attendance and they all voted to retain the monetary policy rate at 27 percent while unveiling stricter liquidity management measures aimed at draining excess cash from the banking system.
The meeting, the 303rd in the MPC’s history, signalled the apex bank’s continued resolve to tame inflation, stabilise the naira, and impose greater discipline on the financial sector—despite the economic pressures facing households and businesses.
The decision reflects what analysts describe as “cautious confidence” in the direction of macroeconomic indicators, particularly after months of gradual disinflation and improving stability in the foreign exchange market.
Beyond retaining the MPR, the MPC introduced a significant tightening of the asymmetric corridor around the benchmark rate, adjusting it from +250/-250 basis points to a much narrower +50 and -450 basis points. The shift represents a decisive push to discourage excessive borrowing from the CBN’s lending window while widening the room for deposits — thereby absorbing more liquidity.
This corridor adjustment, according to the committee, is intended to make overnight borrowing “substantially more expensive” for banks, thereby curbing the flow of excess liquidity believed to be fuelling inflation and speculative pressure on the forex market. The Cash Reserve Ratio (CRR) was also retained, reinforcing the CBN’s preference for liquidity sterilisation as a tool to maintain macroeconomic stability.
Analysts say the narrower upper band reduces opportunities for arbitrage, while the wider lower band forces banks into more responsible liquidity management. Taken together, the measures signal the CBN’s stronger-than-ever commitment to mop up cash from the system at a time when inflation remains stubbornly high.
For the seventh consecutive month, headline inflation decelerated year-on-year in October 2025.
The MPC attributed this favourable trend to several key factors: sustained monetary tightening, a more stable exchange rate, improved foreign capital inflows, and a surplus current account position. The relative stability in petrol prices and improved food supply chains also contributed to easing price pressures.
However, the MPC was quick to note that inflation remains far above levels considered safe for sustainable economic growth.
With Nigeria’s heavy import dependence, exchange rate fluctuations continue to transmit quickly into consumer prices, meaning any premature policy loosening could reverse recent gains.
The committee therefore chose to maintain its current stance, arguing that the lagged effects of previous tightening are still working their way through the economy.
“Allowing these measures to continue transmitting is essential for a durable reduction in inflation,” the MPC said.
The MPC also acknowledged the robustness of Nigeria’s external sector, pointing to the surplus current account balance and steady accumulation of external reserves. These factors have helped stabilise the naira and contributed to the ongoing moderation in inflation.
Members also commended the fiscal–monetary collaboration that led to Nigeria’s recent credit rating upgrade by major international agencies and the country’s removal from the Financial Action Task Force (FATF) grey list.
Such developments, they noted, will boost investor confidence, enhance capital inflows, and support macroeconomic stability.
