This research study was conducted on banking sector reforms, its opportunities and challenges for Nigeria Economic Development. The study examined how the banking sector performed a decade after the 2005 banking recapitalization, the problems associated with the profitability and efficiency of banks. The study utilized multiple regression using SPSS, The correlation coefficient R2 for each of the banks studied indicated that most of the variations in the dependent variables were explained in the independent variables. The Variance Impact Factor (VIF) and Ftests showed that model was not plagued by multicollinearity and the model’s goodness of fit adjudged reliable. It became apparent from the findings that the banking sector reforms in 2005 significantly impacted on the lending rates, deposits and profitability. The study recommends that various macroeconomic and institutional problems facing the Nigerian economy, which include inappropriate macroeconomic policies, inadequate policy coordination, social -political instability, high cost of doing business and multiple taxes and levies should be tackled with new bank reforms.