BY Bonny Amadi
The Central Bank of Nigeria (CBN) has ordered banks currently operating under regulatory forbearance to suspend dividend payments to shareholders and bonuses to directors and senior management.
The affected financial institutions, having been earlier given deadlines and extensions in order to meet the repayment, may not have been taken unawares by the apex bank’s action based on repeated circulars on the forbearance loans.
In a circular, 850/DIR/ CON/LAB/018/008. Dated June 23, 2025, addressed to all banks, titled “Temporary suspension of dividend payments/ bonuses, and investments in foreign subsidiaries, signed by Olubukola Akinwunmi, director of banking supervision, on Friday, the CBN said the directive aims to strengthen capital buffers and promote prudent capital retention across the sector.
The statement read, “The Central Bank of Nigeria as part of its ongoing efforts to strengthen resilience and stability of the Nigerian banking sector has reviewed the capital positions and provisioning adequacy of bank currently operating under approved regulatory forbearance regimes, specifically in relation to credit exposures and Single Obligor Limits (SOL)”.
It will be recalled that following the outbreak of the COVID-19 pandemic, the CBN on May 27, 2020, issued a regulatory forbearance to All Other Financial Institutions (OFIs), directed all DMBs in the country to restructure loan terms and tenors to households and businesses affected by the coronavirus outbreak.
The apex bank had in its regulatory interventions, extended the facilities tenure in 2022, extended the 5% interest rate per annum on all CBN intervention facilities for one year, which ostensibly terminated on 28th February 2023.
The memo to this effect titled, FPR/DIR/PUB/ CIR/001/040 dated March 15, 2022, directed to all banks and other financial institutions (OFIs) titled “Re: Regulatory forbearance for the restructuring of credit facilities impacted by Covid-19” signed by, Chibuzo A, Efobi, Director Financial Policy and Regulation Department, gave banks and other financial institutions one year grace to clean up their books on the affected loans.
The statement read “further to our circular dated March 03, 2021, {Ref FPR/ DIR/PUB/CIR/01/001” on the above, the central bank of Nigeria (CBN) hereby extends the 5% per annum interest rate on all CBN intervention facilities for one year.
This takes effect retrospectively from the 28th of February 2022’ “Further enquiries on the provisions of this circular may be addressed to the Director, Development finance department’ the CBN further directed.
Regulatory forbearance is a temporary suspension or relaxation of certain regulations by a government or regulatory body during times of economic hardship or crisis.
The measure is normally implemented to provide relief to individuals, businesses, or financial institutions facing financial difficulties.
The regulator also directed the affected banks to halt new investments in foreign subsidiaries or offshore ventures.
According to the circular, the move targets lenders benefiting from forbearance on credit exposures and single obligor limits (SOL) — part of a broader transitional arrangement by the CBN to stabilise the banking industry following macroeconomic shocks and sector-wide restructuring.
“This temporary suspension is until such a time as the regulatory forbearance is fully exited and the banks’ capital adequacy and provisioning levels are independently verified to be fully compliant with prevailing standards,” the circular reads.
“This supervisory measure is intended to ensure that internal resources are retained to meet existing and future obligations and to support the orderly restoration of sound prudential positions.”
The CBN said it would continue to monitor compliance and work closely with affected institutions.
The apex bank stressed that the policy is designed to ensure internal capital is retained to meet obligations and support a return to sound prudential footing.
The development comes as banks push to meet the new capital thresholds expected to take effect in March 2026.
The affected commercial banks are expected to comply fully with the new directive and adopt prudent capital management practices during this period.
The central bank had taken similar steps in the past to strengthen the financial system.
In 2020, the CBN directed all deposit money banks in the country to restructure loan terms and tenors to households and businesses affected by the coronavirus outbreak.
In March 2021 and April 2022, the apex bank extended interest rate forbearance on loans by 12 months.
The financial regulator also intervened in 2023 when it asked deposit money banks (DMBs) to stop utilising gains from the revaluation of the naira to pay dividends or finance operations.
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