Central Bank Withdraws Licenses from 46 Microfinance Banks

The Central Bank of Nigeria (CBN) has taken decisive action, stripping 46 microfinance banks (MfBs) of their operational permits, effective from July 1. This significant development was announced through a statement released on Wednesday in Abuja by the Acting Director of the apex bank's Corporate Communications Department.

This move aligns with the CBN's statutory authority, specifically sections 12 and 13 of the Banks and Other Financial Institutions Act (BOFIA), 2020. The revocation received the final endorsement of the CBN Governor, Mr. Olayemi Cardoso. The affected institutions were found to have consistently failed in meeting the essential regulatory standards required for their continued operation as licensed financial entities.

According to the CBN's official statement, "The revocation of the licenses is part of CBN’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 remains committed to promoting a safe, sound and resilient financial system. It will continue to take appropriate supervisory and regulatory actions, where necessary, to maintain public confidence in the Nigerian financial system.”

The revocation order further detailed several critical circumstances that necessitated this action. These include instances where banks possessed insufficient assets to cover their liabilities, ceased operations without obtaining CBN approval, or exhibited prolonged inactivity and a complete halt in financial intermediation. Additionally, some of the affected MfBs failed to commence operations within 12 months of receiving their license approval, while others could not maintain the mandatory minimum capital funds, which had been eroded by losses.