The Central Bank of Nigeria (CBN) has instituted structural reforms to broaden its efforts in consolidating and raising regulatory effectiveness in the financial services sector. The bank’s policies are also being built to expand existing supervisory frameworks, clarify institutional responsibilities, and maintain focused oversight of non-prudential and emerging risks. The apex bank’s new compliance directives to banks, Payment Service Banks and Other Financial Institutions are expected to enhance the quest for improved regulatory effectiveness and industry-wide oversight responsibilities.
One of the critical roles of the Central Bank of Nigeria (CBN) is ensuring high standards of banking practice and financial stability through its surveillance activities.
The financial sector regulator is also empowered by the Bank and Other Financial Institutions (BODFIA) Act 2020 to promote an efficient payments system that thrives in a sound financial system in the country.
To achieve these objectives, the apex bank constantly issues policies and regulations to entrench strong oversight responsibilities as well as sound and efficient financial systems.
In addition to its core functions, the CBN has over the years performed some major developmental functions, focused on all the key sectors of the Nigerian economy (financial, agricultural and industrial sectors).
Overall, these mandates are carried out by the bank through its various departments.
Besides, CBN under the leadership of Olayemi Cardoso is through economic reforms, and targeted policies, transparent market operations, effective coordination between monetary and fiscal authorities, and a commitment to rebuild trust, stabilizing the exchange rate, curbing inflation, strengthening banks’ capital buffers, and fostering an environment conducive to the success of both businesses and individuals.
The ethics and professionalism of bankers and treasurers are under constant scrutiny, which is why we have introduced the FX Global Code for all authorized dealers and market participants.
“At the Central Bank, we have intensified surveillance of market activities to ensure compliance and eliminate bad actors who attempt to undermine the system. Together, we must build a market based on strong governance and transparency. As regulators, we will maintain a zero-tolerance approach to compliance violations,” he said.
Last week, the apex bank assigned new roles to its newly inaugurated Compliance Department.
In a letter to all banks, Payment Service Banks and Other Financial Institutions, the apex bank notified the institutions that the Compliance Department was established in the first quarter of this year.
CBN director, Compliance Department, Olubunmi Ayodele-Oni, stated that unit will now have oversight responsibility for Financial Crime Supervision (including AML/CFT/CPF and sanctions compliance), Market Conduct Supervision (including disclosure practices, complaints management frameworks, and advertising standards), Enterprise Security Supervision (including cybersecurity, data protection, and third-party risk management) and Corporate Governance and ESG Supervision (including board effectiveness and ESG oversight).
“When operations commenced in Q2 2025, responsibility for the oversight of non-prudential risk areas was formally reassigned to the Department. This structural reform forms part of the Bank’s broader efforts to consolidate and embed regulatory effectiveness within existing supervisory frameworks, clarify institutional responsibilities, and maintain focused oversight of non-prudential and emerging risks,” it said.
The apex bank explained that henceforth, all regulatory reports, correspondence, and related enquiries concerning these matters should be directed to the Director, Compliance Department through the established communication channels.
“Financial institutions will receive direct communication from the Department regarding specific points of contact and submission procedures. The CBN looks forward to continued cooperation from all institutions in ensuring a smooth transition and in upholding the highest standards of compliance with applicable regulatory requirements,” it stated.
What the apex bank is doing
According to Cardoso, the banking sector remains robust with key indicators reflecting a resilient system.
“The non-performing loan ratio remains within the prudential benchmark of 5 percent, showcasing strong credit risk management. The banking sector liquidity ratio comfortably exceeds the regulatory floor of 30 percent, a level which ensures banks are maintaining adequate cash flow to meet the needs of customers and their operations. The recent stress test conducted also reaffirmed the continued strength of our banking system,” he said.
Also, to ensure that our banking system can effectively support the growth of our economy, efforts to strengthen banks’ capital buffers were announced in 2023 with a two-year implementation window.
According to him, the banking sector remains in a strong position to support Nigeria’s economic recovery by enabling access to credit for MSMEs and supporting investment in critical sectors of our economy.
In the same vein, he said Other Financial Institutions (OFIs) hold significant potential to drive productivity and economic growth by expanding access to credit and financial services for underserved individuals and businesses.
“To unlock this untapped potential, we aim to strengthen key institutions—particularly Primary Mortgage Banks (PMBs) and Microfinance Banks (MFBs)—to enhance their efficiency and impact,” he said.
“Our strategy includes implementing model mortgage foreclosure laws to stimulate lending and reduce delinquency, integrating PMBs and MFBs into the GSI platform to minimize non-performing loans, and leveraging Development Finance Institutions (DFIs) more effectively to provide increased on lending facilities to well-managed OFIs,” he added.
Entrenching efficiency, best practices
Cardoso, during the unveiling at the CBN’s Strategy for 2024 – 2028, at the CBN Head Office, said that the vision of the bank was to be a trusted and respected central bank promoting confidence in the economy, driven by five strategic themes to address the five focal areas that have been identified as the most critical to achieving the Bank’s objectives at this time.
Highlighting the themes, the Governor said that the first thematic area – Price Stability and Monetary Policy Effectiveness, would guide the leveraging of established monetary policy instruments and rigorous data analysis to pursue the unwavering commitment to price stability.
He said the second theme focuses on building a “Robust and Resilient Financial System” to deliver a resilient financial sector and ensure that financial inclusion objectives were an integral part of policy design to broaden access to financial products that promote sustainable economic growth.
“Governance, Compliance and Advisory Partners to the Federal Government” was adopted as the third theme, stemming from the Bank’s commitment to being a transparent, reliable, and trusted advisor to the Federal Government.
Speaking further, he stated that, conscious of the importance of the role of people, processes, and technology in the attainment of the Bank’s objectives, two enabling themes: “Excellence in Central Banking Operations” and “An Impact focused High-Performance Organization” had been adopted as the fourth and fifth thematic areas, respectively.
He listed “Integrity, meritocracy, professionalism, accountability, courage, and tenacity” as the core values needed to guide the Bank’s actions toward ensuring professionalism, transparency, accountability, and unwavering commitment to the Nigerian people. While commending the Director, Strategy Management Department, and his team for coming up with the strategy in-house, without external technical support, he urged every staff member to take decisive actions to prioritize the principles of ethics, good governance, and transparency.
He, therefore, called for collaboration from all stakeholders, noting that the strategy was not just for CBN, but belonged to every Nigerian, to build a prosperous Nigeria as well as ensure that the Bank becomes a respected and highly credible organization.
Members of staff of the apex bank said that the new strategy, which is the fourth in the history of the Central Bank of Nigeria, aspires to reposition the Bank to its core mandate and to be an institution at the forefront of economic transformation.
They recalled that, over the years, the CBN had implemented three strategy cycles from 2012 to 2015, 2015 to 2019, and 2021 to 2024, all of which had their peculiar focus.
They expressed his appreciation to the Bank’s Management and the staff of the Strategy Management Department for their commitment and unwavering support to the development of the first in-house strategy within a short period.
The highlight of the launch was the unveiling of the elements of the new strategy theme: “Repositioning for Impact”.
Other stakeholders acknowledged that the new strategy resonates with the thematic model of repositioning the Mission, Vision, and Values of the CBN for greater impact.
They lauded the Management and all the staff in the Bank and across the Branches for galvanizing the Bank’s workforce for the engagement that brought the project to life, and for their unwavering backing, and reassured the support of everyone in executing the Strategy.
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What the law says
The 2007 Central Bank of Nigeria (CBN) Act mandates the apex bank as one of its objectives to promote financial system stability.
The CBN ensures the safety and soundness of the financial system in Nigeria through banking sector reforms, improved access to finance, adequate institutional capacity building and implementation of good corporate governance practices.
President, Bank Customers Association of Nigeria (BCAN), Dr. Uju Ogubunka, said that ensuring financial and banking system stability is important because the failure of financial institutions, particularly banks, is capable of undermining public confidence, precipitate unanticipated contraction in money supply, reduce savings and investments, and induce payment system collapse with adverse effects on the real economy.
The CBN under Cardoso further carried out several efforts to improve the functioning of the FX market.
This has led to good results with average daily turnover in the Nigerian Autonomous Foreign Exchange Market increased by 226 per cent in the first half of last year when compared to the same period in 2023.
Foreign portfolio inflows have increased by over 72 per cent during this period, while foreign exchange reserves have risen from $32 billion in May 2023 to over $41.5 billion.
This represents the equivalent of 10 months’ import cover and marks the highest reserve level in nearly three years.
The market has also supported over $9 billion in capital outflows over the past year as investors were able to freely repatriate capital and dividends without the need to wait for several months as experienced in the past.
He said the apex bank has intensified surveillance of market activities to ensure compliance and eliminate bad actors who attempt to undermine the system.
“Together, we must build a market based on strong governance and transparency. As regulators, we will maintain a zero-tolerance approach to compliance violations,” he said.
“Within the banking sector, I am pleased to note that the sector remains robust with key indicators reflecting a resilient system. The non-performing loan ratio remains within the prudential benchmark of five per cent, showcasing strong credit risk management,” he said.
“The banking sector liquidity ratio comfortably exceeds the regulatory floor of 30 percent, a level which ensures banks are maintaining adequate cash flow to meet the needs of customers and their operations. The recent stress test conducted also reaffirmed the continued strength of our banking system”, he added.
Overall, the CBN remains dedicated to fostering a secure banking environment where depositors can be fully confident in the safety of their funds. The financial sector regulator says it will continue to monitor and adapt strategies to safeguard the financial interests of all Nigerians and stakeholders in the financial system.