Nigeria’s banks are under fresh regulatory pressure as the Central Bank of Nigeria sets an April 30 deadline for lenders to submit Board-approved Risk-Based Capital (RBC) stress test reports.
The directive marks a tougher phase of oversight following the recent recapitalisation exercise, shifting focus from the size of bank capital to its ability to withstand economic shocks.
Issued on March 6, 2026, the directive requires banks to evaluate how their capital positions would perform under adverse credit scenarios, including detailed assessments of methodology, compliance, and capital impact.
In a joint statement signed by Olubukola Akinwunmi and Hakama Sidi Ali, the apex bank said the policy is aimed at safeguarding gains from the recapitalisation programme. “Banks must conduct regular stress testing and maintain adequate capital buffers to ensure resilience,” the CBN stated.
The framework builds on the Banks and Other Financial Institutions Act (BOFIA) 2020 and strengthens earlier stress testing guidelines introduced in 2019.
Analysts say the new regime goes beyond meeting minimum capital thresholds by testing the quality and durability of bank capital.
According to DataPro, the RBC stress test acts as an “ultimate filter,” simulating a 12-month period of asset deterioration to determine whether banks can absorb potential defaults without breaching regulatory limits.
While 33 banks have met the revised capital requirements, the tests could reveal new capital gaps. Where deficiencies are identified, lenders will be required to raise additional funds beyond initial thresholds.
Under the new rules, banks must meet either 100 per cent of their internally assessed capital shortfall or 50% of the regulator’s estimate, whichever is higher. They will have an 18-month window to close any gaps.
Banks that fall short will face stricter supervision, including follow-up stress tests within six months, while compliant institutions will undergo annual assessments.
The framework also introduces a 10% provisioning floor for high-risk sectors such as manufacturing and agriculture, aimed at cushioning banks against macroeconomic shocks.
The CBN noted that the recapitalisation programme has already improved asset quality, transparency, and overall financial stability. However, regulators insist that stronger safeguards are needed to ensure long-term resilience.
