Section 27, The Banking Act, 2019

(1) A bank or financial holding company shall maintaincapital adequacy ratio as prescribed by the Central Bank both on a solo basis and a consolidated basis. (2) The Central Bank may prescribe a higher capital adequacy ratio with respect to - (a) a particular bank, if it is satisfied that the bank has insufficient capital to shield itself against risks arising from the business activities of that bank; or (b) all banks, for a period that the Central Bank may determine, if it is satisfied that the conditions in the financial system so warrants. (3) A financial holding company shall ensure that there is adequate distribution of capital within different entities of its group according to allocation of risks. (4) The capital adequacy ratio shall be measured as a ratio of the capital base of a bank or financial holding company to its risk-weighted asset exposure. (5) The Central Bank may define the eligible capital, categories of risk assets, appropriate adjustments and additions to risk weights for the purpose of calculating the ratio. (6) The Central Bank may also prescribe capital buffers with respect to a particular bank or financial holding company. (7) In determining the percentage for the minimum capital adequacy ratio, the Central Bank shall in each case have regard to- (a) the nature, scale and risk of the bank or financial holding company's operations and other available financial resources; (b) the amount and nature of net-own funds of a bank required to protect the interests of depositors and potential depositors. (8) The Central Bank may by statutory instrument prescribe other prudential measures that it considers necessary or appropriate. (9) A bank who fails to observe the capital adequacy ratio prescribed by the Central Bank may be prohibited from- (a) advertising for or accepting new deposits; (b) granting credit and making investment; or (c) paying dividend to shareholders. (10) A financial holding company who fails to observe the capital adequacy ratio prescribed by the Central Bank may be prohibited from paying dividend to shareholders. (11) The Central Bank may require a bank or financial holding company to draw up, within a specified time, a capital restoration plan acceptable to the Central Bank. (12) A bank or financial holding company who contravenes this section is liable to an action under sections 66 and 67. 50 51 Capital adequacy.