The Central Bank of Nigeria (CBN) has revoked the operating licences of 46 microfinance banks across the country over their failure to comply with key regulatory requirements, in a move aimed at strengthening the stability of Nigeria’s financial system and protecting depositors.
The apex bank announced the decision in a statement issued on Wednesday by its Acting Director of Corporate Communications, Hakama Sidi-Ali, saying the revocation takes immediate effect.
The CBN explained that the action was taken pursuant to its powers under Sections 12 and 13 of the Banks and Other Financial Institutions Act (BOFIA), 2020, following the discovery of serious regulatory infractions by the affected institutions.
Regulatory breaches trigger action
According to the apex bank, the affected microfinance banks failed to meet the conditions required to continue operating as licensed financial institutions, making regulatory intervention necessary.
It noted that routine supervisory activities revealed persistent violations of banking regulations, prompting the decision to withdraw their licences.
The CBN stressed that the action forms part of its ongoing efforts to strengthen confidence in the banking sector and ensure that only financially sound institutions remain in operation.
Reasons for licence revocation
The bank identified several infractions that informed the decision, including inadequate assets to meet liabilities, prolonged inactivity, cessation of financial intermediation, closure of operations without regulatory approval, failure to commence business within 12 months of obtaining licences, and inability to maintain the statutory minimum capital unimpaired by losses.
It explained that these deficiencies rendered the affected institutions unable to effectively perform their obligations as licensed financial institutions.
The apex bank added that strict compliance with prudential guidelines remains essential to maintaining the integrity and stability of Nigeria’s financial system.
CBN reaffirms commitment
Explaining the rationale behind the move, the CBN said the licence revocation is aimed at safeguarding the financial sector and protecting customers.
“The revocation of the licences is part of the bank’s ongoing efforts to safeguard the stability of the financial sector, protect depositors, and ensure that licensed institutions comply with current laws and regulatory requirements,” the statement read.
The bank reaffirmed its commitment to promoting a safe, sound and resilient financial system, adding that it would continue to take appropriate supervisory and regulatory actions whenever necessary to preserve public confidence in Nigeria’s banking industry.
The CBN also released the full list of the 46 affected microfinance banks whose operating licences have now been withdrawn, bringing an end to their operations as licensed financial institutions in the country.
