CBN Targets Bank Owners, Directors Over Insider Lending, Unveils Tougher Measures
- The CBN has tightened banking regulations, requiring banks to maintain capital that matches their risk exposure and strengthening oversight of insider lending
- The regulator is also limiting investments in foreign subsidiaries to 10% of shareholders’ funds and warning banks against risky lending
- The CBN is also deploying digital tools, artificial intelligence and data analytics to improve bank supervision, protect depositors and prevent financial instability
PAY ATTENTION: Find it fast with our new search feature at Legit.ng!
Legit.ng journalist Victor Enengedi has over a decade's experience covering energy, MSMEs, technology, banking and the economy.
The Central Bank of Nigeria (CBN) has intensified its enforcement of banking regulations, requiring lenders to maintain capital levels that reflect their risk exposure while tightening controls on insider lending, corporate governance and large loans.
The Director of Banking Supervision at the CBN, Dr Olubukola Akinwunmi, disclosed this at the 37th Finance Correspondents Association of Nigeria (FICAN) Conference in Abuja.
Source: UGC
He said the regulator’s risk-based capital framework, introduced in March 2026, was designed to strengthen banks following the recent recapitalisation exercise and reduce the likelihood of another industry-wide capital-raising exercise.
CBN introduces risk-based capital requirements
Akinwunmi explained that the framework moves beyond a uniform minimum capital requirement by considering each bank’s business model and risk profile.
Under the policy, lenders with greater exposure to potential losses must maintain sufficient capital to withstand financial shocks.
The framework, anchored on Sections 13 and 63 of the Banks and Other Financial Institutions Act (BOFIA), requires stress tests covering risks such as foreign exchange exposure, concentrated lending, deteriorating loan quality and governance failures.
Banks will also be assessed against adverse economic conditions, sector-specific disruptions and risks arising from complex business operations.
Akinwunmi said insider-related lending would attract particularly strict scrutiny because of its potential to weaken banks’ financial positions.
He added that the CBN was strengthening corporate governance oversight by examining the qualifications, experience and integrity of bank directors and senior executives.
According to him, weak board supervision, reckless lending, insider abuses and ineffective internal controls have contributed to banking failures in Nigeria and elsewhere.
CBN enforces rules on insider loans, foreign investments
The CBN director said the regulator was enforcing its Insider Credit Circular issued in February 2025, with some bank owners, shareholders and board members leaving their positions amid concerns over insider lending.
He warned that continued violations could affect the eligibility of certain individuals to serve on bank boards.
Akinwunmi also clarified that the CBN had not introduced a new restriction preventing Nigerian banks from expanding into other African countries.
Instead, he said, the regulator was enforcing an existing rule limiting investments in foreign subsidiaries to 10% of a bank’s shareholders’ funds.
The CBN wants banks to comply strictly with the requirement and avoid exposing newly raised capital to excessive offshore investment risks.
CBN deploys digital tools to strengthen supervision
Akinwunmi disclosed that the CBN had introduced a digital Supervisory Examination Application to improve bank inspections and make supervisory decisions more transparent.
Source: UGC
The platform will allow examiners to conduct much of their work digitally and create records showing how assessments and regulatory decisions were reached.
It will also help preserve the experience of retiring examiners, with artificial intelligence-enabled tools potentially making their expertise available to younger supervisors.
CBN releases latest lending rates
Meanwhile, Legit.ng earlier reported on CBN's September lending-rate data, including the banks with the highest and lowest rates and the impact of the Monetary Policy Rate cut to 23%.
Stanbic IBTC’s maximum lending rate reached 60%, while Guaranty Trust Bank’s prime rate was just 3%. The wide gap shows how sharply borrowing costs can vary between banks and customers.
Source: Legit.ng
