The Central Bank of Nigeria (CBN) has revoked the operating licences of 46 microfinance banks across the country. The action is contained in a recent notice issued by the apex bank.
The revocation forms part of the CBN’s ongoing efforts to strengthen the microfinance sub-sector by ensuring that only institutions that meet regulatory standards continue to operate.
CBN Revokes 46 Microfinance Bank Licenses
According to the notice, the licences of the affected microfinance banks were withdrawn for various regulatory infractions. Common reasons for such actions by the CBN include failure to meet minimum capital requirements, insolvency, persistent breach of banking regulations, inactivity, and cessation of business operations for extended periods.
The CBN has directed that the affected institutions should immediately cease all banking operations. Depositors of the impacted banks are advised to contact the Nigeria Deposit Insurance Corporation (NDIC), the official liquidator, for the payment of insured deposits.
Impact on Depositors and the Sector
The revocation is expected to have limited impact on the broader financial system because microfinance banks generally serve a niche market. However, customers of the affected institutions may face temporary disruptions in accessing their funds until the NDIC concludes the liquidation process.
The CBN has repeatedly stated that its regulatory actions are aimed at protecting depositors and maintaining stability in the financial system. Similar exercises in the past have led to the exit of weak and non-compliant institutions from the sector.
CBN’s Regulatory Drive
This latest move aligns with the CBN’s broader reform agenda in the financial sector. The apex bank has, in recent years, taken decisive steps to clean up the microfinance, finance company, and primary mortgage bank sub-sectors by withdrawing licences from institutions that fail to meet prudential requirements.
The CBN is expected to publish the full list of the affected microfinance banks on its website for public information. Stakeholders in the microfinance sector have been urged to ensure strict compliance with all regulatory requirements to avoid similar sanctions in the future.
