The Central Bank of Nigeria (CBN) lowered its benchmark interest rate by 50 basis points to 26.50% on Tuesday, while disclosing that 20 lenders have already met new minimum capital requirements under an ongoing sector-wide recapitalisation drive.
The decisions were announced in Abuja at the conclusion of the 304th meeting of the Monetary Policy Committee (MPC), as policymakers sought to balance inflation management with financial system stability.
CBN Governor Olayemi Cardoso said the committee voted unanimously to reduce the Monetary Policy Rate (MPR) from 27% to 26.50%. The liquidity ratio was retained at 30%, while the standing facilities corridor was adjusted to +50 and -450 basis points around the MPR.
The Cash Reserve Ratio (CRR) was left unchanged at 45% for commercial banks and 16% for merchant banks. The apex bank also retained the 75% CRR on non-Treasury Single Account public sector deposits.
The MPR serves as the benchmark rate guiding lending costs across the banking system and is the central bank’s primary tool for managing inflation and liquidity conditions. The rate had been held at 27% in November, following a tightening cycle aimed at curbing price pressures and stabilising the currency.
Alongside the rate decision, Cardoso provided an update on the recapitalisation programme launched in March 2024, which requires banks to raise fresh capital within 24 months to strengthen balance sheets and enhance resilience.
The exercise, which began on April 1, 2024, runs until March 31, 2026. Under the framework, banks must meet higher capital thresholds based on licence category, with qualifying capital restricted to paid-up share capital and share premium, excluding retained earnings and reserves.
Commercial banks with international licences are required to raise a minimum of N500 billion, while national commercial banks must meet a N200 billion threshold. Regional commercial banks face a N50 billion requirement. Merchant banks must also raise N50 billion. Non-interest banks are required to hold N20 billion for national licences and N10 billion for regional licences.
According to Cardoso, 33 banks have so far raised additional capital, and 20 of them have met the new minimum capital requirements.
He described the progress as steady and said it reaffirms movement toward a more robust and well-capitalised financial system. The MPC, he added, reiterated the strategic importance of completing the recapitalisation exercise, noting that stronger capital buffers would enhance the sector’s capacity to support sustainable growth and withstand external shocks.
The recapitalisation drive marks the most significant overhaul of Nigeria’s banking capital framework in over a decade. Analysts say the policy is designed to align lenders’ balance sheets with the scale of the economy and rising credit demands, particularly in infrastructure, manufacturing and energy.
Cardoso also said Nigeria’s gross external reserves rose to $50.45 billion as of February 16, the highest level in 13 years. The reserve position provides import cover of approximately 9.68 months for goods and services, he said, offering a buffer against external volatility.
The combination of a modest rate cut and sustained prudential tightening suggests the central bank is seeking to calibrate policy carefully. While inflationary pressures have moderated at the margin, liquidity conditions remain tight, and banks are simultaneously navigating capital-raising efforts.
Market participants will be watching how lenders approach the recapitalisation deadline, whether through rights issues, private placements, mergers or strategic investors. The early compliance of 20 institutions may reduce systemic risk concerns, though smaller and regional lenders could face more challenging capital-raising conditions.
For the broader economy, the MPC’s latest moves signal a cautious shift toward easing, without abandoning the emphasis on financial stability. With the March 2026 recapitalisation deadline approaching and macroeconomic conditions still fluid, the CBN appears intent on reinforcing the banking system even as it adjusts its monetary stance.