…CBN maintains lending rate at 27%
…Experts back lending rate retention
By Yahaya Umar
Sixteen commercial banks have fully complied with the Central Bank of Nigeria’s new capitalisation threshold of ₦500bn.
The CBN Governor Mr Olayemi Cardoso, confirmed this on Tuesday during a media briefing on the outcome of the apex bank’s Monetary Policy Committee meeting.
He added that 27 banks are still in the process of raising the required capital, assuring that the CBN is closely monitoring developments.
On March 28, 2024, the apex bank issued a circular notifying banks of a new capital raise.
With the review, the new capital requirement of International Banks was raised to N500bn, National Banks capital was raised to N200bn while regional banks new capital was reviewed upward to N50bn.
However, the CBN exempted banks’ reserves, shareholders’ funds and retained earnings from the capital requirement in order to inject fresh capital into the system.
The exercise commenced on April 1, 2026, and would end 24 months later on March 31, 2026, the CBN said.
He said, “The Committee noted with satisfaction, the sustained resilience of the banking system, with most financial soundness indicators remaining within regulatory thresholds.
“Members also acknowledged the substantial progress in the ongoing recapitalization programme, with sixteen banks achieving full compliance with the revised capital requirements. The Committee, thus, urged the Bank to ensure a successful implementation and conclusion of the programme”.
The announcement came as the Central Bank, at its 303rd meeting of the Monetary Policy Committee ,MPC, retained the lending rate at 27 percent to consolidate disinflation gains.
Cardoso said the CBN is keeping policy steady as inflation continues to ease and economic conditions show signs of stabilisation.
He said the committee opted to maintain its stance in order to consolidate recent progress toward achieving low and stable inflation, noting that future decisions would remain firmly data-driven.
The hold follows the MPC’s first interest rate cut in four years at its last meeting, when it reduced the Monetary Policy Rate by 50 basis points to 27% marking the first easing move since 2020.
That decision came as inflation began to cool after months of intense price pressures.
On Tuesday, the MPC also adjusted the asymmetric corridor around the MPR to +50/-450 basis points.
The move is intended to discourage banks from keeping excess funds with the CBN and to encourage stronger lending to productive sectors of the economy.
Other key policy parameters were retained. The Cash Reserve Ratio for commercial banks remains at 45%, and for merchant banks at 16 percent.
The liquidity ratio was kept at 30%. The CRR on non-TSA public sector deposits also stays at 75%, a measure the bank says supports improved liquidity management.
Headline inflation fell to 16.05% in October, down from 18.02% in September, following a revision of the consumer price index by the National Bureau of Statistics, which updated its base year and adjusted item weights to better reflect household spending patterns.
Inflation had surged to repeated 28-year highs in 2023 after the removal of fuel subsidies and a sharp depreciation of the naira.
Cardoso said the committee welcomed the continued deceleration in inflation for the seventh successive month, attributing the progress to sustained monetary tightening, a stable exchange rate, increased capital inflows and a surplus current account balance.
Improved food supply and relatively stable petrol prices also contributed to easing price pressures, though inflation remains well above the bank’s preferred range.
The MPC said the slowdown in both headline and food inflation suggests that the effects of earlier policy measures, including tax adjustments, are still unfolding.
It added that holding the policy stance steady in a period of global uncertainty would allow the full impact of previous rate increases to filter through to the real economy and help further moderate prices.
Members also noted the strong performance of the external sector, citing a surplus current account balance and steady reserve accretion, which have supported exchange-rate stability and reduced inflationary pressures.
They welcomed recent upgrades to Nigeria’s sovereign credit rating by major agencies and the country’s removal from the FATF grey list, saying these developments should strengthen investor confidence and boost capital inflows.
The committee expressed satisfaction with the resilience of the banking system, stating that most financial soundness indicators remain within regulatory limits.
Meanwhile, the President of the Capital Market Academics of Nigeria, Prof Uche Uwaleke has said the decision of the MPC to retain the MPR at 27% is good for the economy.
He said, “I consider the MPC decision to maintain the MPR at 27% keeping the CRR and Liquidity Ratio unchanged, a welcome development.
“This is especially so against the backdrop of the narrowing and asymmetry of the standing facility corridor from +250/-250 bps to +50/-450 bps, effectively lowering the ceiling for CBN lending and widening the gap on the deposit end.
“This adjustment signals cautious operational easing, even as headline MPR remains elevated apparently to continue to manage inflation and FX pressure.
“With the CBN’s lending window now cheaper, banks face lower marginal funding costs which should ordinarily reduce interbank volatility and encourage lending to SMEs.
“The real challenge is whether banks will translate this corridor adjustment into actual lower lending rates”.
Given fiscal pressures from deficit financing which compound inflation risk and the need to support growth, Uwaleke said the MPC decision is quite appropriate
