Bank Verification Number (BVN) in Nigeria’s database has grown to 68.6 million as of March 2026, according to newly released data by the Nigeria Inter-Bank Settlement System (NIBSS).

The figure, however, signals a slowdown in new registrations compared with previous years, following the Central Bank of Nigeria’s (CBN) introduction of stricter BVN rules last month.

Data from NIBSS shows that the database rose by 754,128 between January and March 2026. In 2025, a total of 4.3 million BVNs were registered, largely driven by the Non-Resident Bank Verification Number (NRBVN) initiative, which allows Nigerians in the diaspora to register remotely.

Despite the growth, analysts warn that with fewer than one million new BVNs recorded in the first quarter, the year’s total may fall below past records.

“While a single BVN can be linked to multiple accounts, there remain unlinked accounts in the system, indicating further room for adoption,” the spokesperson added.

The CBN recently unveiled a revised BVN regulatory framework aimed at tightening fraud monitoring and improving identity management.

In a circular dated March 12, 2026, the apex bank said: “Under the new guidelines, financial institutions are required to establish and maintain a temporary watch-list for BVNs linked to suspected fraudulent transactions reported within the banking system.”

The circular further explained: “A BVN may remain on this temporary watch-list for a maximum period of twenty-four (24) hours, during which the BVN owner shall be contacted to provide clarification regarding the identified transaction(s).”

The revised rules also impose a stricter age requirement for BVN registration, limiting enrollment to individuals aged 18 and above. Additionally, customers will now be allowed to change the phone number linked to their BVN only once.

“These measures are aimed at strengthening identity verification and safeguarding the integrity of banking transactions,” the CBN stated.

With the first quarter of 2026 showing slower growth, industry analysts say it remains crucial for banks and regulators to close the gap between active accounts and registered BVNs to further enhance financial security.

A forensic audit report has detailed the multi-trillion naira financial mismanagement that led to the January 2024 sack of former directors and owners of Union Bank of Nigeria (UBN) and the appointment of a new board and management by the Central Bank of Nigeria (CBN).

This included a $300 million shadow loan scandal and illegal withdrawals from depositor funds which had threatened the solvency of the bank.

Extracts from the forensic report indicated that the former owners and directors were engaging in financial reporting manipulation, fraudulent misappropriation of foreign loans, unethical financial engineering and inappropriate withdrawal of depositors’ funds.

The report indicated that Titan Trust Bank, the investment vehicle of the former owners and directors, which was merged with Union Bank, had unhedged loan of $300 million obtained from Africa Export Import Bank (Afreximbank).

This undisclosed material item was surreptitiously passed onto the books of Union Bank, and led to unethical financial engineering to cover up the adverse effects on the operations of the bank.

It was discovered that the former directors and owners had added the same $300 million Afreximbank loan to make up over $490 million used in acquiring shares of Union Bank and at the same time placed the burden of repayment of the foreign currency loan on Union Bank, in what amounted to using the bank’s fund to acquire its own shares.

The report indicated that the former owners and directors neither hedged against revaluation loss for the foreign currency loan nor covered interest and fees, while at the same time retaining the full ownership benefits.

This unorthodox financial engineering resulted in revaluation loss of some N396 billion and interest and fees payable of more than N147 billion by third quarter 2025.

Forensic investigators also discovered that the former owners and directors engaged in wilful diversion of foreign loans borrowed from offshore banks, illegally rerouting funds borrowed for on-lending to customers into multi-million dollar swap transactions.

Interestingly, the swap transactions were done with the CBN without informing the regulator of the primary purpose of the offshore funds while simultaneously providing false reports to the offshore lenders. Besides, the forensic report uncovered multi-million dollar diversion of Union Bank’s depositors and lenders’ funds.

In one instance, some $58 million was withdrawn to cover maturing obligations under the undisclosed and unhedged $300 Afreximbank loan. Total inappropriate withdrawals amounted to over $100 million, which created foreign currency liquidity crisis for the bank.

A forensic analyst, who craved anonymity because of the sensitivity of the report, stated that the apex bank’s intervention saved the bank from imminent shutdown and possible negative spillovers in the financial services industry.

According to the analyst, the CBN’s intervention provided the first generation bank with a “soft window” to manage its operations while the new directors redirect the affairs of the bank. The resultant corrective measures have seen Union Bank bouncing back, regaining more market share and redeeming maturing obligations.

By third quarter 2025, the bank was already on its path to recovery following actions by the new management, with many analysts expecting it to be able to meet the N200 billion new capital requirement to retain its standalone national banking licence.

In a formal statement on the judgment delivered on March 25, 2026, by the Federal High Court in Lagos concerning its regulatory action on Union Bank, the CBN stated that while it was obtaining and carefully reviewing the Certified True Copy (CTC) of the judgment, and that the status of Union Bank has not changed, implying that the lender remains under the CBNintervention-management.

“As the apex regulatory authority, the CBN remains committed to acting in accordance with its mandate and established legal processes, the banking watchdog noted. “The CBN assures the public that UBN’s status is unchanged and that it remains fully capable of meeting its obligations to customers, depositors, and all stakeholders.

“The CBN will continue to provide the necessary regulatory oversight to ensure Union Bank operates in a safe, sound, and stable manner, while maintaining public confidence in the financial system,” CBN stated.

In what appeared a reference to Union Bank and other CBN-intervention banks, the apex bank in a formal statement confirming the successful recapitalisation of 33 banks, stated that “a limited number of institutions remain subject to ongoing regulatory and judicial processes, which are being addressed through established supervisory and legal frameworks”.

The apex bank, however, assured that “all banks remain fully operational, ensuring continued access to banking services for customers”, allaying any fears over the operations of the intervention banks, which still face legal issues.

By Blaise Udunze

Following the successful conclusion of the banking sector recapitalisation programme initiated in March 2024 by the Central Bank of Nigeria, the industry has raised N4.65 trillion. No doubt, this marks a significant milestone for the nation’s financial system as the exercise attracted both domestic and foreign investors, strengthened capital buffers, and reinforced regulatory confidence in the banking sector. By all prudential measures, once again, it will be said without doubt that it is a success story.

CBN

Looking at this feat closely and when weighed more critically, a more consequential question emerges, one that will ultimately determine whether this achievement becomes a genuine turning point or merely another financial milestone. Will a stronger banking sector finally translate into a more productive Nigerian economy, or will it be locked out?

This question sits at the heart of Nigeria’s long-standing economic contradiction, seeing a relatively sophisticated financial system coexisting with weak industrial output, low productivity, and persistent dependence on imports truly reflects an ironic situation. The fact remains that recapitalisation, by design, is meant to strengthen banks, enhancing their ability to absorb shocks, manage risks and support economic growth. According to the apex bank, the programme has improved capital adequacy ratios, enhanced asset quality, and reinforced financial stability. Under the leadership of Olayemi Cardoso, there has also been a shift toward stricter risk-based supervision and a phased exit from regulatory forbearance.

These are necessary reforms. A stable banking system is a prerequisite for economic development. However, the truth be told, stability alone is not sufficient because the real test of recapitalisation lies not in stronger balance sheets, but in how effectively banks channel capital into productive economic activity, sectors that create jobs, expand output and drive exports. Without this transition, recapitalisation risks becoming an exercise in financial strengthening without economic transformation.

Encouragingly, early signals from industry experts suggest that the next phase of banking reform may begin to address this long-standing gap. Analysts and practitioners are increasingly pointing to small and medium-sized enterprises (SMEs) as a key destination for recapitalisation inflows, which is a fact beyond doubt. Given that SMEs account for over 70 percent of registered businesses in Nigeria, the logic is compelling. With great expectation, as has been practicalised and established in other economies, a shift in credit allocation toward this segment could unlock job creation, stimulate domestic production, and deepen economic resilience. Yet, this expectation must be balanced with reality. Historically, and of huge concern, SMEs have received only a marginal share of total bank credit, often due to perceived risk, lack of collateral, and weak credit infrastructure.

Indeed, Nigeria’s broader financial intermediation challenge remains stark. Even as the giant of Africa, private sector credit stands at roughly 17 percent of GDP, and this is far below the sub-Saharan African average, while SMEs receive barely 1 percent of total bank lending despite contributing about half of GDP and the vast majority of employment. These figures underscore the structural disconnect between the banking system and the real economy. Recapitalisation, therefore, must be judged not only by the strength of banks but by whether it meaningfully improves this imbalance.

Nigeria’s economic challenge is not merely one of capital scarcity; it is fundamentally a problem of low productivity. Manufacturing continues to operate far below capacity, agriculture remains largely subsistence-driven, and industrial output contributes only modestly to GDP. Despite decades of banking sector expansion, credit to the real sector has remained limited relative to the size of the economy. Instead, banks have often gravitated toward safer and more profitable avenues such as government securities, treasury instruments, and short-term trading opportunities.

This is not irrational. It reflects a rational response to risk, policy signals, and market realities. However, it has created a structural imbalance in which capital circulates within the financial system without sufficiently reaching the productive economy. The result is a pattern where financial sector growth outpaces real sector development, a phenomenon widely described as financialisation without productivity gains.

At the center of this challenge is the issue of credit allocation. A recapitalised banking sector, strengthened by new capital and improved buffers, should theoretically expand lending. But this is, contrarily, because the more important question is where that lending will go. Will Nigerian banks extend long-term credit to manufacturers, finance agro-processing and value chains, and support scalable SMEs or will they continue to concentrate on low-risk government debt, prioritise foreign exchange-related gains, and maintain conservative lending practices in the face of macroeconomic uncertainty? Some of these structural questions call for immediate answers from policymakers.

Some industry voices are optimistic that the expanded capital base will translate into a broader loan book, increased investment in higher-risk sectors, and improved product offerings for depositors; this is not in doubt. There are also expectations that banks will scale operations across the continent, leveraging stronger balance sheets to expand their regional footprint. Yes, they are expected, but one thing that must be made known is that optimism alone does not guarantee transformation. The fact is that without deliberate incentives and structural reforms, capital may continue to flow toward low-risk assets rather than high-impact sectors.

Beyond lending, experts are also calling for a shift in how banking success is measured. The next phase of reform, according to the experts in their arguments, must move from capital thresholds to customer outcomes. This includes stronger consumer protection frameworks, real-time complaint management systems and more transparent regulatory oversight. A more technologically driven supervisory model, one that allows regulators to monitor customer experiences and detect systemic risks early, could play a critical role in strengthening trust and accountability within the system.

This dimension is often overlooked but deeply significant. A banking system that is well-capitalised but unresponsive to customer needs risks undermining public confidence. True financial development is not only about capital strength but also about accessibility, fairness, and service quality. Nigerians must feel the impact of recapitalisation not just in improved financial ratios, but in better banking experiences, more inclusive services, and greater economic opportunity.

The recapitalisation exercise has also attracted notable foreign participation, signaling confidence in Nigeria’s banking sector. However, confidence in banks does not necessarily translate into confidence in the broader economy. The truth is that foreign investors are typically drawn to strong regulatory frameworks, attractive returns, and market liquidity, though the facts are that these factors make Nigerian banks appealing financial assets; it must be made explicitly clear that they do not automatically reflect confidence in the country’s industrial base or productivity potential.

This distinction is critical. An economy can attract capital into its financial sector while still struggling to attract investment into productive sectors. When this happens, growth becomes financially driven rather than fundamentally anchored. The risk therefore, is that recapitalisation could deepen Nigeria’s financial markets but what benefits or gains when banks become stronger or liquid without addressing the structural weaknesses of the real economy.

It is clear and explicit that the current policy direction of the CBN reflects a strong emphasis on stability, with tightened supervision, improved transparency, and stricter prudential standards. These measures are necessary, particularly in a volatile global environment. However, there is an emerging concern that stability may be taking precedence over growth stimulation, which should also be a focal point for every economy, of which Nigeria should not be left out of the equation. Central banks in emerging markets often face a delicate balancing act and this is putting too much focus on stability, which can constrain credit expansion, while too much emphasis on growth can undermine financial discipline, as this calls for a balance.

In Nigeria’s case, the question is whether sufficient mechanisms exist to align banking sector incentives with national productivity goals. Are there enough incentives to encourage long-term lending, sector-specific financing, and innovation in credit delivery? Or does the current framework inadvertently reward risk aversion and short-term profitability?

Over the past two decades, it has been a herculean experience as Nigeria’s economic trajectory suggests a growing disconnect between the financial sector and the real economy. Banks have become larger, more sophisticated and more profitable, yet the irony is that the broader economy continues to struggle with high unemployment, low industrial output, and limited export diversification. This divergence reflects the structural risk of financialization, a condition in which financial activities expand without a corresponding increase in real economic productivity.

If not carefully managed, recapitalisation could reinforce this trend. With more capital at their disposal, banks may simply scale existing business models, expanding financial activities that generate returns without contributing meaningfully to production. The point is that this is not solely a failure of the banking sector; it is a systemic issue shaped by policy design, regulatory priorities, and market incentives, which needs the urgent attention of policymakers.

Meanwhile, for recapitalisation to achieve its intended purpose and truly work, it must be accompanied by a deliberate shift or intentional policy change from capital accumulation to productivity enhancement and the economy to produce more goods and services efficiently. This begins with creating stronger incentives for real sector lending with differentiated capital requirements based on sector exposure, credit guarantees for high-impact industries, and interest rate support for priority sectors can encourage banks to channel funds into productive areas and this must be driven and implemented by the apex bank to harness the gains of recapitalisation.

This transformative process is not only saddled with the CBN, but the Development finance institutions also have a critical role to play in de-risking long-term investments, making it easier for commercial banks to participate in financing projects that drive economic growth. At the same time, one of the missing pieces that must be taken into cognizance is that regulatory frameworks should discourage excessive concentration in risk-free assets. No doubt, banks thrive in profitability, as government securities remain important; overreliance on them can crowd out private sector credit and limit economic expansion.

Innovation in financial products is equally essential. Traditional lending models often fail to meet the needs of SMEs and emerging industries as this has continued to hinder growth. Banks must explore new approaches, including digital lending platforms, supply chain financing, and blended finance solutions that can unlock new growth opportunities, while they extend their tentacles by saturating the retail space just like fintech.

Accountability must also be embedded in the system. One fact is that if recapitalisation is justified as a tool for economic growth, then its outcomes and gains must be measurable and not obscure. Increased credit to productive sectors, higher industrial output and job creation should serve as key indicators of success. Without such metrics, the exercise risks being judged solely by financial indicators rather than its real economic impact.

The completion of the recapitalisation programme represents more than a regulatory achievement; it is a defining moment for Nigeria’s economic future. The country now has a banking sector that is better capitalised, more resilient, and more attractive to investors. These are important gains, but they are not ends in themselves.

The ultimate objective is to build an economy that is productive, diversified, and inclusive. Achieving this requires more than strong banks; it requires banks that actively power economic transformation.

The N4.65 trillion recapitalisation is a significant step forward. It strengthens the foundation of Nigeria’s financial system and enhances its capacity to support growth. However, capacity alone is not enough and truly not enough if the gains of recapitalisation are to be harnessed to the latter. What matters now is how that capacity is deployed.

Some of the critical questions for urgent attention are as follows: Will banks rise to the challenge of financing Nigeria’s productive sectors, particularly SMEs that form the backbone of the economy? Will policymakers create the right incentives to ensure credit flows where it is most needed? Will the financial system evolve from a focus on profitability to a broader commitment to the economic purpose of fostering a more productive Nigerian economy and the $1 trillion target?

The above questions are relevant because they will determine whether recapitalisation becomes a catalyst for change or a missed opportunity if not taken into cognizance. A well-capitalised banking sector is not the destination; it is the starting point. The real journey lies in building an economy where capital works, productivity rises, and growth becomes both sustainable and inclusive.

Blaise, a journalist and PR professional, writes from Lagos and can be reached via: [email protected]