Central Bank of Nigeria Prudential Guidelines For Deposit Money Banks In Nigeria

Central Bank of Nigeria Prudential Guidelines For Deposit Money Banks In Nigeria Current Version

January 2022

The Nigerian banking sector witnessed dramatic growth post-consolidation (2005) and the developments posed a lot of challenges for the industry and regulation. The initial perceptions that the Nigerian banking system was sound and insulated from the global financial crisis were misplaced. The factors that led to the creation of an extremely fragile financial system that was tipped into crisis by the global financial meltdown include Macroeconomic instability caused by large and sudden capital outflows, Major failures in corporate governance at Banks, Lack of investor and consumer sophistication, Uneven supervision and enforcement. To address these challenges, the Central Bank of Nigeria introduced a four-pillar reform programme towards enhancing the quality of banks, establishing financial stability, enabling healthy financial sector evolution, and ensuring the financial sector contributes to the real economy. In this regard, the revised prudential guidelines aim to address various aspects of Banks’ operations, such as risk management, corporate governance, KYC and anti-money laundering/ counter financing of terrorism and loan loss provisioning. The guidelines also aim to address the peculiarities of different loan types and financing to different sectors.