The Central Bank of Nigeria has canceled the operating licenses of 46 microfinance banks, taking effect July 1, 2026. Regulatory breaches left many of these institutions insolvent or inactive. The decision affects banks across 16 states and the Federal Capital Territory.
Acting Director of Corporate Communications Mrs. Hakama Sidi-Ali announced the move Wednesday. It was approved by CBN Governor Olayemi Cardoso under the Banks and Other Financial Institutions Act, 2020. The affected banks failed to meet minimum requirements, including insufficient capital, unapproved closures, and prolonged inactivity.
Kano State had the most revocations. Bellbank MFB, formerly Tsanyawa, was among those losing its license. Lagos followed, along with banks in Abia, Kebbi, Niger, Ogun, and other states. The regulator stated the action was needed to protect depositors and maintain financial system stability.
Specific violations included failure to start operations within 12 months of licensing, inability to cover liabilities with assets, and losses that eroded required minimum capital. Many had stopped serving low-income households and small businesses.
Related: Nigerian Navy seizes illegal diesel in Rivers
The CBN said the revocation was part of its efforts to safeguard the financial sector. It promised continued oversight to preserve public confidence in the system.
These banks are meant to provide credit and financial services to underserved groups. Their failures create risks beyond depositors, affecting the broader economy. The enforcement follows earlier sector cleanup efforts, though some analysts say more transparency is still needed.
Earlier this year, finance experts called for public financial disclosures from all deposit-taking fintechs and microfinance banks. They argued institutions handling public funds should face stricter accountability. The regulator has not yet adopted such a rule.
The closures occur as Nigeria’s financial sector faces liquidity challenges and compliance gaps. While the CBN aims to strengthen the system, the shutdowns may disrupt credit access for small businesses and individuals who relied on these banks.
In Kano, where most revocations happened, local business owners worried about losing financing. A trader in Sabon Gari market said, “We depended on these banks for quick loans. Now we’ll have to look elsewhere, and it won’t be easy.”
Related: Hybrid Motors secures $95m investment for Lagos, Abuja EV factory, mega charging stations
The CBN has not said whether it will help affected depositors transition. Its priority remains enforcing standards to prevent systemic risks, even if that reduces the number of licensed institutions.
The regulator has taken similar steps before. In 2022, it revoked licenses of over 100 institutions for comparable violations. The repeated actions show ongoing difficulties in ensuring these banks operate sustainably while meeting their social goals.
Compliance is now mandatory. The fallout may challenge Nigeria’s financial inclusion efforts.
The banking sector’s struggles reflect broader economic pressures. Regulators have raised concerns about stability amid rising risks.