CBN Revokes Licenses of 46 Microfinance Banks in Nigeria

The Central Bank of Nigeria (CBN) recently revoked the operating licenses of 46 microfinance banks (MFBs) due to their failure to adhere to regulatory requirements outlined in the Bank and Other Financial Institutions Act (BOFIA) 2020. Reasons for the revocation included insufficient assets to meet liabilities, closure of operations without CBN approval, prolonged inactivity, and inability to maintain minimum capital requirements.

This action is part of a broader effort by the CBN to ensure the safety of depositors and the health of the financial sector. In May 2023, the CBN had previously revoked licenses for 132 microfinance banks and three finance companies, indicating ongoing challenges within the sector.

Common complaints against MFBs include unauthorized deductions, excessive interest rates, hidden charges, and poor asset management. The CBN and the Nigeria Deposit Insurance Corporation (NDIC) are urged to provide support to ensure the viability of microfinance institutions in Nigeria, which are seen as crucial for bridging the poverty gap and promoting inclusive growth.