The Central Bank of Nigeria (CBN) has formally announced the end of the COVID-19-era regulatory forbearance measures for commercial banks, effective June 30, 2025.
In a circular dated June 20 and signed by the Director of Banking Supervision, Olubukola Akinwunmi, the apex bank outlined a coordinated set of transitional steps to ensure banks return to full compliance with prudential standards, while restoring risk-sensitive credit and capital assessments across the sector.
EDITOR’S PICKS
EKO HOT BLOG reports latest directive comes weeks after the CBN directed commercial banks currently operating under regulatory forbearance to suspend dividend payments to shareholders, bonuses to directors and senior management, and halt any new investments in foreign subsidiaries.
At the time, Akinwunmi said the move was part of a broader effort to “strengthen capital buffers and promote prudent capital retention across the sector.”
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.
Key changes effective June 30, 2025
All COVID-19-related regulatory concessions, including waivers on single obligor limits (SOL), have now been terminated. The CBN said this move is aimed at reintroducing risk sensitivity in credit classification, provisioning, and asset quality evaluations.
Banks are now required to align all affected credit exposures with the existing Prudential Guidelines and related regulations. However, to support a cleanup of asset quality, the CBN is temporarily waiving the requirement that fully provisioned loans must be retained for one year before write-off. This applies specifically to loans affected by the earlier forbearance regime.
Additionally, the apex bank has temporarily lifted regulatory caps on the recognition of Additional Tier 1 (AT1) capital in the computation of capital adequacy ratios (CAR). This measure, effective from June 30, 2025, to March 31, 2026, is designed to strengthen capital buffers during the transition.
However, the CBN made it clear that this temporary relief does not replace the broader recapitalisation programme announced in March 2025.
Restrictions for banks using transitional relief
Banks availing themselves of the transitional reliefs are now subject to operational restrictions. These institutions are barred from paying dividends, issuing bonuses to directors and senior management, or making investments in foreign subsidiaries. The CBN said these conditions will remain in place until the affected banks have restored their capital and provisioning levels to full regulatory compliance.
To ensure transparency, the CBN is mandating quarterly disclosures from banks. These must include the provisioning status of affected credit exposures, CAR calculations with and without transitional relief, classification migration of restructured loans, and full disclosure on AT1 instruments.
All submissions must be sent within 10 working days after the end of each quarter.
What ending forbearance means for banks
The end of the forbearance measures signals a return to tighter regulatory oversight and an emphasis on balance sheet strength. Banks are now expected to submit detailed capital restoration plans outlining how they intend to regain full compliance. These strategies may include cost optimisation, asset reduction, risk transfers, and potential business model revisions. The restoration plans will also form the basis for ongoing regulatory engagement.
The CBN has called on banks to engage proactively with the supervision department and show full commitment to the transitional process. The overall goal, the apex bank said, is to maintain the health and resilience of Nigeria’s financial system.
FURTHER READING
In essence, this new phase marks the end of pandemic-era flexibility and the beginning of a stricter compliance regime aimed at stabilising the sector and reinforcing risk management discipline.
Philip Ibitoye is a Special Correspondent with EKO HOT BLOG. Click here to find daily analysis and critical insight on trending issues in Lagos and other parts of Nigeria.
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