The Central Bank of Nigeria (CBN) has explained why it withdrew the operating licences of 46 microfinance banks across the country.
In a statement issued on Wednesday, July 1, and signed by its Acting Director of Corporate Communications, Hakama Sidi-Ali, the apex bank said the affected institutions lost their licences after being found guilty of multiple regulatory violations, including inadequate capitalisation and extended periods of inactivity.
According to the CBN, the revocation took effect on July 1, 2026, after receiving approval from its Governor, Olayemi Cardoso. The decision was made in line with the provisions of the Banks and Other Financial Institutions Act (BOFIA), 2020.
The bank explained that the affected microfinance institutions no longer satisfied the conditions required to continue operating as licensed financial institutions.
As a result, their licences were withdrawn as part of the CBN’s broader efforts to strengthen regulatory oversight and reinforce the integrity of Nigeria’s financial system, BusinessDay reports.
The apex bank stressed that the action reflects its continued resolve to preserve the stability of the nation’s financial sector, protect depositors’ interests, and ensure that all licensed financial institutions comply with applicable laws and prudential regulations.
The statement said: “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.”
Microfinance banks play a critical role in Nigeria’s economy by providing essential financial services and credit facilities to low-income earners, small businesses, and communities that have traditionally had limited access to banking services.
The latest regulatory action also shows the ongoing difficulties confronting parts of Nigeria’s microfinance banking sector, where weak capital bases, poor corporate governance practices, and declining loan portfolios have been worsened by persistent inflation and elevated interest rates.
The CBN listed ten reasons for revoking the operating licences of the 46 microfinance banks:
1. Failure to meet the requirements for continued operation as licensed financial institutions.
2. Assets below liabilities, making the institutions financially unstable.
3. Stopping operations without CBN approval.
4. Prolonged periods of inactivity or dormancy.
5. Failure to commence business within 12 months of obtaining a licence.
6. Failure to maintain the minimum capital requirement.
7. Failure to meet operational conditions for licensed financial institutions.
8. Non-compliance with the Banks and Other Financial Institutions Act (BOFIA), 2020, and other regulations.
9. Weak capitalisation and poor financial structure.
10. Governance deficiencies and deterioration in asset quality.
