E-Financial
Nigerian Banks Under Pressure as Bad Loans Hit 8.03% After CBN Policy Shift
Non-performing loans (NPLs) in Nigeria’s banking sector rose to 8.03 per cent in January 2026, exceeding the Central Bank of Nigeria’s (CBN) prudential threshold of five per cent, following the withdrawal of regulatory forbearance granted to banks on certain credit exposures.
CBN
The latest figure, contained in the CBN’s January 2026 Economic Report, represents an increase of 0.52 percentage points from the 7.51 per cent recorded in December 2025.
According to the report, the rise in bad loans followed the reclassification of credit facilities after the apex bank terminated regulatory reliefs that had previously allowed banks to restructure troubled loans without classifying them as non-performing.
“Following the bank’s loan reclassification after the withdrawal of forbearance, the non-performing loans ratio rose by 0.52 percentage point to 8.03 per cent compared with the level in the preceding period and was above the 5.00 per cent prudential threshold,” the report stated.
The development comes seven months after the CBN directed banks benefiting from regulatory forbearance on credit exposures and single obligor limit breaches to suspend dividend payments, defer bonuses for directors and senior management, and halt new investments in foreign subsidiaries and offshore ventures.
The measures were introduced to strengthen capital buffers, improve balance-sheet resilience and ensure affected institutions retained earnings while exiting temporary regulatory support.
The withdrawal of COVID-19-related forbearance and waivers on single obligor limits, which took effect on June 30, 2025, has resulted in several previously restructured loans being reclassified as non-performing, contributing to the increase in industry-wide bad loans.
Analysts say the latest figures indicate that weaker loan assets previously cushioned by regulatory relief are now being fully recognised on banks’ balance sheets.
In its macroeconomic outlook report, the CBN warned that a significant increase in bad loans could weaken asset quality and pose risks to financial system stability.
The apex bank also advocated deeper integration of the Global Standing Instruction (GSI) framework across financial institutions to improve loan recovery and strengthen credit discipline.
As part of broader reforms, the CBN had earlier directed bank directors with non-performing insider-related loans to resign from their positions and mandated banks to recover such debts through collateral enforcement, including the seizure of pledged shareholdings.
More recently, the regulator introduced restrictions on large borrowers with non-performing loans, barring them from accessing additional credit facilities and certain banking services.
Under the directive, financial institutions are prohibited from granting new loans, letters of credit, performance bonds and other contingent liabilities to large-ticket obligors whose non-performing facilities are recorded in the Credit Risk Management System (CRMS) or licensed private credit bureaus.
Despite the deterioration in asset quality, the CBN maintained that the banking sector remained resilient.
The report showed that the industry’s liquidity ratio improved to 63.38 per cent in January from 57.22 per cent in December, remaining well above the regulatory minimum of 30 per cent.
Similarly, the capital adequacy ratio stood at 12.05 per cent, slightly lower than the 12.35 per cent recorded in December but above the minimum requirement of 10 per cent.
“The Nigerian banking industry remained resilient, with most financial soundness indicators staying within prudential regulatory thresholds, affirming financial stability and institutional soundness,” the report stated.
However, members of the CBN’s Monetary Policy Committee (MPC) have expressed concern over the rising level of bad loans.
The CBN Deputy Governor for Economic Policy, Muhammad Abdullahi, warned that increasing NPLs could undermine financial stability and weaken the transmission of monetary policy.
He noted that the challenge was occurring alongside persistent excess liquidity in the banking system, potentially affecting the flow of credit to productive sectors.
Also speaking, MPC member Aku Odinkemelu called for stronger regulatory oversight, saying the rise in non-performing loans underscored the need for heightened supervisory vigilance to protect asset quality and ensure effective credit transmission.
Industry observers say the latest data present a mixed outlook for the banking sector, with strong liquidity and capital positions offset by growing concerns over asset quality as banks adjust to stricter prudential standards following the end of regulatory forbearance.
Central Bank of Nigeria (CBN) has launched a new digital platform to track every foreign exchange transaction involving Bureaux De Change (BDC) operators, marking a major step in its efforts to improve transparency and strengthen oversight of the country’s retail forex market.
In an operational guidance issued on July 15 to authorised dealer banks and licensed BDCs, the apex bank introduced the FX BDC Purchase Tracker (FXBT), a centralised electronic portal designed to monitor foreign exchange purchases by BDCs from the point of request through approval, settlement and eventual sale.
The CBN said the portal will require BDCs to upload real-time or same-day data on all FX purchases made through the Nigerian Foreign Exchange Market (NFEM), giving the regulator transaction-level visibility across the retail FX market.
According to the bank, the platform is designed to prevent abuse by making it easier to detect operators attempting to exceed the weekly purchase limit of $150,000, obtain allocations from multiple banks or divert foreign exchange outside approved channels.
The launch of the tracker builds on the CBN’s February policy that restored direct access for licensed BDCs to purchase foreign exchange from authorised dealer banks through the NFEM. While that policy improved access to official FX, the new platform provides the digital infrastructure to monitor how the funds are used.
Under the new framework, authorised dealer banks must conduct comprehensive Know-Your-Customer (KYC) and customer due diligence checks before selling foreign exchange to any BDC.
The new guideline also says banks must verify beneficial ownership information, retain incorporation documents and carry out enhanced due diligence for higher-risk operators.
Any BDC that fails these checks will not be allowed to access official foreign exchange.
The guidance also requires banks to acknowledge BDC purchase requests submitted through the FXBT portal within two business hours and immediately notify operators whether their requests have been approved or rejected.
To discourage speculation, the CBN directed that any forex purchased through the NFEM but left unused must be sold back into the market within 24 hours after the expiration of the utilisation period.
BDCs are also required to disclose any previously unused balances when submitting fresh requests.
In addition, all foreign exchange transactions between banks, BDCs and customers must be settled through registered accounts with licensed financial institutions.
Third-party transactions are prohibited, and any transfer outside a BDC’s registered settlement account will be treated as a regulatory violation.
The apex bank also said all authorised dealer banks and licensed BDCs are expected to comply with the new regulatory guidance and operational procedures with immediate effect.
President Bola Tinubu has signed the Presidential Executive Order on Virtual Assets Coordination, 2026, introducing a coordinated framework to regulate Nigeria’s fast-growing virtual assets sector, combat fraud and strengthen oversight without creating a new regulatory agency.
The Executive Order, which took immediate effect, establishes a Virtual Asset Council to harmonise the activities of financial, revenue and capital market regulators while promoting responsible innovation in the digital economy.
According to a statement issued on Friday by the President’s Special Adviser on Information and Strategy, Bayo Onanuga, the order was signed pursuant to Section 5 of the 1999 Constitution to address growing regulatory gaps as virtual assets increasingly blur the boundaries between currencies, commodities, securities and payment systems.
The Presidency said the fragmented regulatory landscape had exposed Nigeria to risks including money laundering, terrorism financing, cybercrime, data privacy breaches, fraud and significant revenue losses, with fraudulent operators exploiting loopholes to defraud unsuspecting investors.
Under the new framework, the Central Bank of Nigeria (CBN) will chair the Virtual Asset Council, while the Nigeria Revenue Service (NRS) and the Securities and Exchange Commission (SEC) will serve as vice-chairmen. Other members include the Nigerian Financial Intelligence Unit (NFIU) and the Office of the National Security Adviser (ONSA).
The Council will coordinate policy, strengthen collaboration among regulators and work with the Attorney-General of the Federation to develop a harmonised legal framework that aligns virtual asset regulation with Nigeria’s economic, security and social priorities.
The Executive Order also establishes a Virtual Asset Office, domiciled at the CBN, to serve as the Council’s operational secretariat. The office will coordinate information sharing, applications and reporting among participating agencies through an integrated supervisory technology platform while allowing each institution to retain control over its data.
The Presidency stressed that the order does not establish a new regulator or transfer statutory powers from existing agencies. Instead, it creates a coordination mechanism under which regulatory responsibilities will depend on the nature of the virtual asset or activity involved.
Under the arrangement, the SEC will continue to regulate virtual assets classified as securities, while the CBN will oversee payment, settlement, custody and other non-security virtual asset services. The Council will resolve jurisdictional disputes where responsibilities overlap.
As part of the reforms, the CBN will launch a regulatory sandbox that will allow eligible firms to test virtual asset products and blockchain-based solutions under close regulatory supervision before they are introduced into the wider market.
Similarly, the Nigeria Revenue Service will issue a dedicated tax policy for the virtual assets sector to clarify tax obligations, improve voluntary compliance and ensure the rapidly expanding industry contributes fairly to government revenue.
The Federal Government is also finalising a comprehensive Virtual Assets White Paper, which will outline Nigeria’s long-term policy direction for the sector.
President Tinubu directed the newly established Council to produce a Harmonised Implementation Framework within 30 days to facilitate the immediate implementation of the Executive Order and strengthen confidence in Nigeria’s digital economy.
Securities and Exchange Commission (SEC) has commenced a nationwide enlightenment campaign to help Nigerians recover unclaimed dividends and other monies arising from capital market transactions.
The campaign, which began with a town hall meeting in Lagos on Thursday, is aimed at sensitising investors on the existence of unclaimed monies, the role of the National Investor Protection Fund (NIPF) and the procedures for verifying and recovering legitimate claims.
Emomotimi Agama, director-general of SEC, who was represented at the event by Hafsat Rufai, director, Registration and Exchanges, Market Infrastructure Department, said the initiative was necessary to ensure that funds belonging to investors were returned to their rightful owners.
Agama said unclaimed monies administered by the NIPF included return monies from public offers, scheme consideration from mergers, acquisitions and corporate restructuring transactions, as well as other funds belonging to investors that had remained unclaimed.
He noted that the Commission considered it unacceptable for investors’ funds to remain unclaimed, adding that many investors and their families were either unaware that such monies existed or did not know the procedures for recovering them.
Agama said the SEC Board had approved a nationwide public enlightenment campaign to sensitise Nigerians on unclaimed monies, the role of the NIPF and the process for making legitimate claims.
He said the Lagos programme marked the commencement of the outreach, which would subsequently cover the six geopolitical zones and the Federal Capital Territory.
The director-general said the campaign would also address the transmission of securities following the death of an investor, noting that families were often unaware that their deceased relatives owned shares or other capital market investments.
He said even when beneficiaries were aware of such investments, many lacked knowledge of the legal and administrative procedures required to obtain probate or letters of administration and transmit the investments to the rightful beneficiaries.
Agama said the Lagos programme included an expert session on probate administration and the transmission of securities to demystify the process and provide practical guidance to investors and their families.
He urged investors to maintain proper records of their investments and encouraged families to take steps to preserve inherited wealth.
The SEC DG also warned Nigerians against Ponzi schemes and other fraudulent investment arrangements, saying fraudsters continued to exploit economic pressures and digital platforms to lure unsuspecting members of the public with promises of guaranteed and unusually high returns.
He urged the public to be cautious of investment opportunities offering risk-free returns, stressing that investor education and vigilance remained critical to combating financial fraud.
Speaking on behalf of Lawal Pedro, attorney-general and commissioner for Justice,Lagos State, Olujoke Ogunojemite, deputy director in the Ministry of Justice, commended the SEC for extending the campaign to Lagos and recognising the role of legal institutions in resolving issues relating to unclaimed dividends and other assets.
She said the issue had a practical impact on beneficiaries who were unable to access assets after the death of their loved ones.
Ogunojemite said the ministry was committed to ensuring that legal processes did not become barriers to beneficiaries seeking to recover legitimate assets.
She described the SEC’s outreach as commendable, saying it would help restore assets to their rightful beneficiaries.
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