CBN Revokes 46 Microfinance Bank Licenses: What it Means for Nigeria's Digital Economy!

The Central Bank of Nigeria (CBN) has initiated a significant regulatory crackdown, revoking the operating licences of 46 microfinance banks (MFBs). This decision, which takes effect on July 1, 2026, is part of a broader effort to enforce compliance among lenders and strengthen the country's financial system oversight. The CBN Governor, Olayemi Cardoso, approved the action under Sections 12 and 13 of the Banks and Other Financial Institutions Act (BOFIA), 2020.

The primary reason cited for the revocations is the failure of these institutions to meet essential regulatory requirements. The CBN detailed various grounds for this enforcement, including insufficient assets to cover liabilities, prolonged periods of inactivity, cessation of financial intermediation, and failure to commence operations within twelve months of receiving a licence. Additionally, some banks failed to maintain the minimum capital levels required for operating as microfinance banks. The apex bank clarified that each licence was revoked based on one or more of these specific violations, underscoring its commitment to fostering a 'safe, sound and resilient financial system' and preserving public confidence in Nigeria's banking sector.

While many of the affected institutions are relatively small, the list notably includes several microfinance banks linked to Nigeria's burgeoning fintech ecosystem. Among these are Sycamore Microfinance Bank, NOW NOW Digital MFB, OurPass MFB, Creditville MFB, and Casha MFB. Their inclusion drew particular attention due to their association with technology-driven financial services. However, it's important to note that not all companies behind these brands are ceasing operations. For instance, Sycamore clarified that the revoked licence pertained to an MFB it acquired in 2024 as part of a regulatory transition. The company stated it has since secured a finance company licence from the CBN, rendering the acquired MFB licence redundant, and confirmed that its operations remain unaffected, allowing customers to continue using its services as usual.

This latest move by the CBN follows a recent mandate requiring banks and fintechs to localise payment data within a six-month notice period, a directive that has previously raised concerns among industry experts. The increasing stringency in regulatory supervision highlights the CBN's resolve to improve governance and financial stability within the sector. While microfinance banks are crucial for extending financial services to underserved populations and small businesses, the sector has faced persistent challenges such as undercapitalisation, governance issues, and weak operational performance. This development further emphasizes the critical importance for fintechs operating through regulated banking entities to maintain appropriate regulatory licences as their business models evolve to ensure ongoing compliance and operational continuity.