Financial Crime World

Nigeria’s Central Bank Introduces New Regulations to Boost Banking Sector

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In an effort to drive efficiency in economic activities and ensure the viability of Nigeria’s banking sector, the Central Bank of Nigeria (CBN) has introduced several new regulations. The move comes as the country continues to grapple with double-digit inflation, which rose to 28.92% in December from 21.82% in January.

Promoting Corporate Governance

The CBN has implemented a number of policies aimed at promoting corporate governance and compliance with applicable licensing regimes. One such policy is the new Corporate Governance Guidelines for Commercial, Merchant, Non-Interest and Payment Service Banks, and Financial Holding Companies in Nigeria, 2023.

  • The guidelines require that no board of directors shall consist of only one gender and promote gender diversity and inclusivity by requiring banks to take a practical approach to women’s economic empowerment.
  • The CBN has also fixed the composition of the board of directors of banks, tenures of bank executives, and requires more non-executive directors than executive directors on the boards of directors.

Modern Banking Regulations for Fintechs

The CBN has adopted more modern banking regulations for fintechs, reversing its previous stance on the opening of bank accounts for virtual asset service providers. Banks may now provide services to these providers subject to certain restrictions.

E-Naira and Traditional Currencies

The CBN is reportedly working to address concerns around the use of the E-Naira, a naira-denominated digital currency issued by the apex bank, and its potential impact on traditional currencies.

Price Verification System

The CBN has introduced limits on deviations of +/−15% in prices of imported items from global averages following the implementation of its price verification system. The move is aimed at stabilizing the economy and reducing inflationary pressures.

Banking Sector Growth

Nigeria’s banking sector continues to grow, with 25 commercial banks, six merchant banks, and four non-interest banks currently operating in the country. The largest five banks by market capitalization on the Nigerian Exchange Limited (NGX) are:

  • Guaranty Trust Holding Company Plc
  • Zenith Bank Plc
  • FBN Holdings Plc
  • Access Holdings Plc
  • United Bank for Africa Plc

Conclusion

The CBN’s efforts to boost the banking sector come as the country prepares for a new era of economic growth and development. The regulator is expected to continue playing a key role in shaping the future of Nigeria’s financial system.