Revisiting the Legal and Regulatory Framework for Banking Business in Nigeria

Abstract

In almost every economy, banking industry is one of the most regulated and supervised
industries. Nevertheless, as banking business continue to evolves, new banking risks and
challenges also continue to emerge, thereby prompting legal and policy reforms. In Nigeria, the
banking industry has recently witnessed fundamental legal and policy reforms through
enactment of the new Banks and Other Financial Institutions Act (BOFIA) 2020; the Nigeria
Deposit Insurance Cooperation (NDIC) Act 2023; Central Bank of Nigeria (CBN) Circular of
2nd September 2021 directing all banks in Nigeria to implement Basel III standards in Nigeria;
and CBN Guidelines for digital banking amongst others. This study, therefore, revisited these
new regulatory and supervisory framework for banking in Nigeria. The objectives were to
examine the critical reforms introduced under the new legal regime for the regulation and
supervision of banks and banking business in Nigeria; and also to determine the adequacy, or
otherwise, of these new reforms in controlling the emerging risks and challenges for Nigeria’s
banking industry. The study found that although the new legal and policy reforms in Nigeria
are laudable, the banking business in Nigeria is faced with new operational risks and challenges
that were not contemplated in the recent legal and policy reforms. Consequently, the study
concluded with policy considerations for overcoming the challenges faced by the regulatory
and supervisory frameworks for banking business in Nigeria.