CBN to Banks: Exit ‘regulatory forbearance’ before resuming payment of dividends, bonuses

*Dr. Olayemi Cardoso, Governor of the Central Bank of Nigeria, assures the citizens the banking sector regulator is firm on a single-digit inflation objective, reaffirming the CBN’s commitment to inflation moderation, market stability and fiscal discipline in the financial ecosystem  

Gbenga Kayode | ConsumerConnect

The Central Bank of Nigeria (CBN) has restated its stance on the directive requiring the Deposit Money Banks (DMBs) to “fully exit regulatory forbearance” before resuming dividend payments to shareholders and other investors in their organisations.

ConsumerConnect reports Dr. Olayemi Cardoso, Governor of CBN, said this Tuesday, September 23, 2025, while speaking at the post-Monetary Policy Committee’s (MPC) meeting media briefing held in Abuja, FCT.

Dr. Olayemi Cardoso, Governor of CBN

The CBN Governor stressed that full compliance with the CBN’s conditions is essential before the banks could resume their pre-restriction operational status.

Cardoso harps on banks’ adherence to ‘forbearance framework’

As regards current concerns about ongoing restrictions placed on certain banks due to outstanding prudential and financial health issues, Cardoso reminded stakeholders in the banking industry of the forbearance framework.

The forbearance framework, he stated, includes limits on offshore investments, dividend distributions to shareholders, and executive bonuses, is always intended as a temporary relief mechanism to help in stabilising the banking sector during turbulent times.

The Governor of CBN told reporters: “The issue of forbearance has been an ongoing conversation since we took the sergeant of responsibility at the Central Bank.

“We are steadfast on the date that we have given with respect to the ending of forbearance.”

It is recalled the forbearance strategy was first introduced 2020 during a period of financial sector instability that threatened systemic risk among the Nigerian banks.

The regulatory relaxation at the time was said to have offered banks considerable breathing room to boost their balance sheets, address non-performing loans, and improve liquidity positions in the banking and financial ecosystem.

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As Nigeria’s macroeconomic outlook is reportedly improving, and banks are actively participating in the ongoing recapitalisation efforts, the CBN has indicated a decisive move to restore full regulatory discipline and compliance in the sector.

Cardoso, in his briefing, further noted that several banks had already started aligning their operations with the new rules ahead of schedule.

He averred: “Those who comply are very welcome to go back to the regime that was in place before we came up with this particular strategy.

“And those who are not, well, they still need to be asked”, meaning a stricter oversight for any laggards.

On CBN’s overarching monetary policy objective

Cardoso as well highlighted the CBN’s principal monetary policy objective of taming inflation and reducing it to single digits.

This is said to be a goal that remains non-negotiable despite mounting political pressures as Nigeria approaches the 2026 pre-election period.

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The CBN Governor though described recent inflation trends as “encouraging”, he however, cautioned stakeholders against complacency.

He stated: “We are pleased that we are seeing consecutive disinflation… this is the fifth time, consecutive. But I want to say that our goal is for single-digits inflation.

“That is something that we are very resolute on, and we will not stop until we get there. So, I want to make that abundantly clear.”

The headline inflation slowed to 20.12 percent August 2025 from 21.88 percent July this year, marking the fifth consecutive monthly decline, according to official statistics.

The CBN Chief yet acknowledged the risks associated with the “political cycle”, which historically tends to weaken fiscal discipline and reform momentum, described as factors that could potentially undermine monetary policy gains after all.

Cardoso said: “We see data. We analyse data. We see things that many don’t see. We are building resilience.

“We are building the buffers. We are looking at the situation, and we are reacting where we have to react—and at the time we need to do so.”

He, therefore, underlined the strategic importance of policy coordination between the CBN and the Federal Ministry of Finance, noting this partnership as key to recent successes in inflation moderation and market stability.

He further explained: “Exchange rate stability is key. If we are going to continue to moderate inflation the way we have, exchange rate stability is key. Fiscal discipline is key.”

Cardoso disclosed the banking regulator is closely monitoring the inflationary impact of FAAC (Federation Accounts Allocation Committee) disbursements and excess liquidity within the financial system in Nigeria.

He reassured investors and the general public that the Central Bank of Nigeria is well-focused on preserving the “hard-won macroeconomic stability” in recent months, and indicated a continuation of vigilant, data-driven policy enforcement in the ecosystem.

Implementation of Non-Resident BVN framework

Dr. Cardoso observed that a notable success this year was the implementation of the Non-Resident Bank Verification Number (NRBVN) framework, which has more than doubled remittance inflows since its launch, according to report.

With investor confidence gradually returning, and new Foreign Exchange (Forex) management tools now in place, Cardoso projected the Nigeria reserves would maintain a “very, very positive upward trajectory” throughout the remainder of 2025 and beyond.

On his two-year leadership at the CBN, Cardoso described the period as both challenging and transformative for him.

The CBN, he enthused, has made significant progress dismantling opaque systems and restoring institutional credibility and trust to the monetary policy space.

A vision of ‘more open, accessible and transparent’ CBN

Going down the memory lane, he said: “When I came to the Central Bank, one of the things that disturbed me at the time was a lot of people used to come here. And I used to wonder what they came to do.

“By the time I leave the Central Bank of Nigeria, you won’t have to come here for anyone. You won’t have to know anybody to do your transactions.”

This vision of a more open, accessible, and transparent Central Bank has driven reforms to Foreign Exchange allocation, financial services, and policy implementation, he stated.

Cardoso equally noted innovations like improved card functionality for Nigerians travelling overseas, and new products emerging from Nigerian banks as signs of growing confidence in the financial system.

For Cardoso, the next phase of reforms at CBN will focus on enhancing regulatory leadership and expanding institutional knowledge to sustain the Bank’s role as a credible, forward-looking financial regulator in the West African country.

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