The Central Bank of Nigeria (CBN) has introduced a major regulatory update that limits the suspension of payment and delivery obligations involving troubled banks and financial institutions to a maximum of two business days. The move is expected to provide greater certainty for businesses, investors, and financial counterparties operating within Nigeria’s banking sector.
In a circular dated July 1, 2026, and addressed to banks and other financial institutions, the apex bank said the clarification was necessary to address concerns surrounding Sections 34(2)(b) and 40(2) of the Banks and Other Financial Institutions Act (BOFIA), 2020. The regulator noted that the absence of a clearly defined timeframe for exercising these powers had created uncertainty in the financial market.
Under the BOFIA provisions, the CBN Governor has the authority to suspend payment or delivery obligations under contracts involving a failing bank. The law also allows the regulator to temporarily prevent counterparties from terminating certain financial contracts when a bank is undergoing resolution measures. However, the new guidance now places a strict limit on how long such suspensions can remain in force.
According to the circular, any suspension of payment obligations, delivery commitments, or termination rights related to an affected contract must not exceed two business days from the date the written order or notice is issued by the CBN Governor. The regulator believes this will help market participants better manage commercial risks while maintaining confidence in the financial system during periods of instability.
The CBN explained that the directive applies to all affected contracts involving banks or financial institutions covered under the relevant sections of BOFIA. With immediate effect, the new rule is expected to improve transparency, enhance predictability in financial transactions, and strengthen trust in Nigeria’s banking industry as regulators continue efforts to safeguard financial stability.
source: The cable
