The Central Bank of Nigeria (CBN) on Wednesday revoked the operating licences of 46 microfinance banks over non-compliance with the regulatory requirements in the Banks and Other Financial Institutions Act, 2020.
The action represents a tougher stance on financial sector compliance as Africa’s largest economy continues efforts to strengthen its banking system.
In a statement, CBN said the decision was approved by Governor Olayemi Cardoso.
“The revocation was approved by the Governor of the Central Bank of Nigeria, Mr. Olayemi Cardoso, following the banks’ failure to meet the regulatory requirements for continued operation as licensed financial institutions,” CBN stated.
It said there were one or more regulatory breaches, including inadequate assets to cover liabilities, unauthorized closure of operations, prolonged inactivity, failure to commence business within 12 months of receiving a licence, and inability to maintain the minimum capital requirements prescribed by law.
The regulator said the action forms part of its broader strategy to reinforce confidence in Nigeria’s financial system by ensuring only financially sound and compliant institutions remain in operation.
“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 CBN said.
The move reflects a growing trend among African financial regulators to tighten oversight of banks and other financial institutions amid increasing concerns over governance, capital adequacy and consumer protection.
Microfinance banks play a critical role in extending banking services to low-income households, small businesses and rural communities that often lack access to traditional commercial banks. However, industry analysts say weak capitalization and poor corporate governance continue to threaten the sustainability of parts of the sector.
Nigeria has one of Africa’s largest microfinance industries, serving millions of individuals and micro-enterprises. The CBN’s latest enforcement action signals that regulators are prioritizing financial stability over the expansion of undercapitalized institutions.
The CBN stressed that it remains committed to maintaining a safe, resilient and transparent financial system capable of supporting economic growth while protecting depositors and investors.
The central bank added that it will continue to take supervisory and regulatory actions whenever necessary to ensure compliance with banking laws and preserve public confidence in Nigeria’s financial sector.
“The Central Bank of Nigeria remains committed to promoting a safe, sound and resilient financial system and will continue to take appropriate supervisory and regulatory actions, where necessary, to maintain public confidence in the Nigerian financial system,” it said.
The latest actions are expected to accelerate the ongoing consolidation of Nigeria’s microfinance banking industry, with stronger and better-capitalized institutions likely to play an increasingly prominent role in advancing financial inclusion across the country.
