As part of its monetary and financial policy measures to further mitigate the impact of the coronavirus pandemic on households, and businesses, the Central Bank of Nigeria (CBN), has approved regulatory forbearance for the restructuring of credit facilities in the Other Financial Institution (OFI) sub-sector.

Central Bank of Nigeria (CBN)

This was disclosed in a circular signed by the Central Bank of Nigeria Director for Financial Policy and Regulatory Department, Kevin Amugo, on Wednesday, May 27, 2020.

In the circular, Central Bank is to reduce interest rates on its facilities through participating financial institutions from 9% to 5% per annum for a year with effect from March 1, 2020.
According to the circular, CBN Intervention facilities availed through participating OFIs are granted a further one-year moratorium on all principal repayments, effective March 1, 2020.

OFIs are granted leave to consider temporary and time-limited restructuring of the tenor and loan terms for households and businesses affected by COVID-19, subject to the recently issued guidelines for restructuring affected credit facilities in the OFIs sub-sector.


The apex bank said other financial institutions are granted leave to consider temporary and time-limited restructuring of the tenure and loan terms of households and businesses affected by the pandemic.

This new policy measure by the apex bank is in continuation of its intervention in the nation’s economy so as to help manage the crisis caused by the coronavirus pandemic and reduce its effects on household and businesses.

This came a day before the Monetary Policy Committee (MPC) meeting for the month of May which was slated for Thursday, May 27, 2020.
 
Meanwhile, to ensure compliance and implementation of this new measure, the CBN shall continue to monitor developments and implement appropriate measures to safeguard financial stability and support stakeholders impacted by the COVID-19 pandemic.


Financial institutions (FI) are companies engaged in the business of dealing with financial and monetary transactions such as deposits, loans, investments, and currency exchange. The most common types of financial institutions include commercial banks, investment banks, brokerage firms, insurance companies, and asset management funds. Other types include credit unions and finance firms. Financial institutions are regulated to control the supply of money in the market and protect consumers.

It would be recalled that the CBN in March announced six initial policy measures to contain the impacts of COVID-19 on the Nigerian economy.