By Uche Amunike
The Central Bank of Nigeria (CBN) has unveiled the new capital base of banks in Nigeria, as it pegged the minimum capital base for commercial banks with international authorization at N500 billion.
According to a circular signed by the Director, Financial Policy and Regulation Department, Haruna Mustafa, and directed to every commercial, merchant, non-interest banks, as well as the promoters of proposed banks, every bank is required to meet the minimum capital requirement within 24 months, effective April 1, 2024 and terminating on March 31, 2026.
This was confirmed by the spokesman of the CBN, Hakama Sidi Ali, in Abuja on Thursday. According to him, the new capital base for commercial banks with national authorization is now pegged at N200 billion, while the new rate for those with regional authorization is placed at N50 billion.
According to the CBN circular, the new minimum capital for merchant banks is pegged at N50 billion, while that of non-interest banks with national and regional authorizations stand at N20 billion and N10 billion respectively.
This announcement came a few days after the CBN Governor, Olayemi Cardoso urged deposit money banks to expedite action on the recapitalization of their capital base, so as to strengthen the financial system.
Recall that after Cardoso assumed office last year, he announced that commercial banks in the country would be directed to increase their capital base to service a $1 trillion economy ambition of President Bola Tinubu’s administration.
The last time the apex bank increased the capital base of banks in Nigeria was in 2005, when the current governor of Anambra State, Prof. Charles Chukwuma Soludo was the CBN governor. Back then, the capital base of banks in Nigeria was raised from N2 billion to N25 billion.
In order for the banks to meet up with the new minimum capital requirements, the apex bank urged banks to consider injecting fresh equity capital through private placements, right issues offers for subscription, upgrade or downgrade of license authorization, as well as mergers and acquisitions.
The CBN also stated that the new minimum capital shall include paid up capital and share premium only, adding that the new capital requirement shall not be based on the funds of the shareholders.
The circular also stated: ‘In line with extant regulations, banks that breach the CAR requirement shall be required to inject fresh capital to regularise their position.’
In the meantime, the CBN has asked that all banks should submit an implementation plan no later than April 30, 2024. They posited that the implementation plan is expected to indicate the chosen option(s) for meeting the new capital requirements and various activities involved with their timelines.
The apex bank also stated that it would monitor and ensure that there is compliance with the new requirements within the given timeline.
According to the CBN circular, The minimum capital requirements for proposed banks shall be paid-up capital, while the new minimum capital requirement shall apply to every new application for banking licenses submitted after April 1, 2024.
It also stated that the CBN will continue to process pending applications for banking licenses for which a capital deposit had been made and/or Approval-in-Principle had been granted, adding that the promoters of such proposed banks would make up the difference between the capital deposited with the CBN and the new capital requirements, not later than March 31, 2026.
