By Opeyemi Adelakun
The Central Bank of Nigeria (CBN) has limited the suspension of certain contractual obligations involving troubled banks to a maximum of two business days, issuing fresh regulatory guidance aimed at strengthening confidence in the country’s financial system and reducing uncertainty in bank resolution processes.
The directive, which took effect immediately on July 1, 2026, was contained in a circular signed by the Acting Director of the Financial Markets Department, Okey Umeano.
According to the apex bank, the guidance clarifies the implementation of Sections 34(2)(b) and 40(2) of the Banks and Other Financial Institutions Act (BOFIA), 2020, after concerns that the absence of a specified duration for contract suspensions had created uncertainty for banks, financial institutions and their counterparties.
Under the new framework, any suspension of payment or delivery obligations under financial contracts involving a failing bank, as well as the temporary suspension of termination rights during a resolution process, must not exceed two business days from the date the CBN Governor issues the relevant order.
The regulator said the clarification is intended to improve transparency, support effective risk management and provide greater certainty for parties dealing with financial institutions undergoing regulatory intervention.
The guidance applies to banks, other financial institutions and counterparties to contracts covered by the relevant provisions of BOFIA.
Section 34(2)(b) of the Act empowers the CBN to facilitate the acquisition of a failing bank as part of measures to preserve financial stability, while Section 40(2) allows the Governor to initiate resolution actions, including the temporary suspension of certain contractual rights, where a banking licence has been revoked in the public interest.
By defining a maximum suspension period, the CBN said market participants will have clearer expectations whenever its statutory resolution powers are invoked.
Although the circular is not linked to any specific financial institution, it comes shortly after the apex bank revoked the operating licences of 46 inactive and insolvent microfinance banks as part of ongoing efforts to strengthen regulatory compliance and maintain stability in the banking sector.
The CBN said the latest guidance was issued pursuant to its powers under Section 56 of BOFIA 2020 and Section 33(1)(b) of the Central Bank of Nigeria Act, 2007.
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