CBN Proposes Guidelines to Separate Banks and Fintechs

The Central Bank of Nigeria (CBN) unveiled draft guidelines on June 10, 2023, aimed at establishing clearer operational boundaries between banks, fintech companies, and related financial entities. This initiative is part of a broader effort to strengthen consumer protection and safeguard financial stability within the Nigerian financial system.

The proposed framework seeks to address regulatory loopholes that arise when entities operate under different licenses and engage in overlapping activities. Key aspects of the guidelines include the requirement for entities to operate independently, maintain separate governance structures, and adhere to capital adequacy and liquidity requirements.

The CBN has stated that no entity with close links will be allowed to grant loans or guarantees to related companies without prior written approval. Additionally, intra-group transactions must be conducted on an arm's length basis, and financial institutions are required to obtain explicit customer consent for offering products and services.

The guidelines are open for public review and comments until July 9, 2023.