The Central Bank of Nigeria (CBN) has introduced new guidelines capping the suspension of payment obligations involving troubled banks and other financial institutions at a maximum of two business days.

The directive, contained in a circular dated July 1 and addressed to all banks and financial institutions, is aimed at clarifying the implementation of Sections 34(2)(b) and 40(2) of the Banks and Other Financial Institutions Act (BOFIA) 2020.

According to the apex bank, the clarification is intended to remove uncertainty surrounding the CBN Governor’s powers to suspend payment or delivery obligations under contracts involving failing financial institutions, as well as to temporarily restrict counterparties’ rights to terminate certain financial contracts during resolution processes.

Section 34(2)(b) of BOFIA empowers the CBN Governor to suspend payment or delivery obligations under contracts involving a failing bank, while Section 40(2) allows for the temporary suspension of termination rights under specified financial contracts during the resolution of troubled institutions.

The CBN noted that the absence of a defined time limit in previous interpretations created uncertainty for counterparties and posed risks to effective commercial risk management within the financial system.

In the circular, the apex bank stated that such suspension “shall not exceed a period of two business days commencing from the date on which the written order or notice of suspension is issued by the CBN Governor.”

It added that the rule applies to all “affected contracts,” including agreements involving banks or financial institutions undergoing regulatory intervention or resolution measures under BOFIA provisions.

The CBN said the move is part of efforts to strengthen financial stability, improve clarity in regulatory enforcement, and ensure better predictability in the banking sector during crisis management.