The Central Bank of Nigeria (CBN) has issued new guidance limiting the suspension of payment obligations and termination rights under certain financial contracts involving troubled banks and other financial institutions to a maximum of two business days….
The Central Bank of Nigeria (CBN) has issued new guidance limiting the suspension of payment obligations and termination rights under certain financial contracts involving troubled banks and other financial institutions to a maximum of two business days.
In a circular dated 1 July 2026 and addressed to all banks and other financial institutions, the apex bank said the guidance was issued to eliminate uncertainty surrounding the practical application of Sections 34(2)(b) and 40(2) of the Banks and Other Financial Institutions Act (BOFIA), 2020.
ISDA Interpretative Guidance on BOFIA
According to the CBN, the absence of a defined maximum duration for the exercise of these powers had created uncertainty for counterparties dealing with Nigerian banks and financial institutions, with the potential to hinder effective commercial risk management.
The circular defines an “Affected Contract” as any contract involving a bank or other financial institution that falls within the scope of the relevant BOFIA provisions.
Under the new guidance, the suspension of any payment or delivery obligation relating to a failing bank, as well as the suspension of any contractual termination right involving a bank undergoing or proposed for resolution, must not exceed two business days from the date the CBN Governor issues the relevant written order or notice.
The apex bank said the directive was issued pursuant to the powers of the CBN Governor under Section 56 of BOFIA and Section 33(1)(b) of the Central Bank of Nigeria Act, 2007.
The CBN noted that the clarification is intended to provide certainty to banks, financial institutions and counterparties while supporting the orderly management and resolution of distressed financial institutions.
The circular, signed by the Acting Director of the Financial Markets Department, Okey Umeano, took immediate effect.