CBN Cancels Licences of 46 Microfinance Banks

The Central Bank of Nigeria (CBN) has cancelled the operating licences of 46 microfinance banks, starting from 1 July. They said this action was due to the banks not meeting the rules needed to keep operating.

The CBN made this announcement in a statement on Wednesday. They said the cancellation was based on their powers under Sections 12 and 13 of the Banks and Other Financial Institutions Act (BOFIA), 2020.

According to the CBN, the decision was approved by Governor Olayemi Cardoso. This was because the banks did not meet the conditions needed to stay as licensed financial institutions.

CBN explained that the cancellation was necessary because the banks broke one or more regulations.

The reasons in the cancellation order included not having enough assets to cover liabilities. They also mentioned that some banks closed operations without getting approval from the CBN. Other reasons were inactivity and stopping financial intermediation.

Other reasons for cancelling the licences included not starting operations within 12 months of getting the licence. Also, some failed to keep the minimum capital funds without losses.

The CBN said this action is part of their ongoing work to strengthen oversight of the financial system. They want to make sure that licensed financial institutions follow the rules and regulations.

"The cancellation of the licences is part of the Bank’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 stated.

They added that they are committed to promoting a safe and sound financial system. They will continue to supervise effectively and take action when needed.

"The Central Bank of Nigeria remains committed to promoting a safe, sound, and resilient financial system. We will keep taking the necessary supervisory and regulatory actions to maintain public confidence in the Nigerian financial system," the bank added.

These cancelled licences are part of the CBN's efforts to improve supervision of banks and other financial institutions. They are focusing on corporate governance, risk management, regulatory compliance, and financial stability.