CBN Cracks Down on Weak Lenders, Revokes Licences of 46 Microfinance Banks to Protect Depositors

CBN Cracks Down on Weak Lenders, Revokes Licences of 46 Microfinance Banks to Protect Depositors
The Central Bank of Nigeria (CBN) has revoked the operating licences of 46 Microfinance Banks (MFBs) across the country in a decisive regulatory action aimed at strengthening the financial system, protecting depositors’ funds, and restoring confidence in Nigeria’s banking industry.
The revocation, which takes effect from July 1, 2026, was carried out pursuant to the powers conferred on the apex bank under Sections 12 and 13 of the Banks and Other Financial Institutions Act (BOFIA), 2020.
In a statement issued by the Acting Director of Corporate Communications, Mrs. Hakama Sidi Ali, the CBN said the decision was approved by its Governor, Mr. Olayemi Cardoso, after the affected institutions failed to meet the regulatory standards required to continue operating as licensed financial institutions.
According to the apex bank, the affected microfinance banks were found to have violated key prudential and operational requirements, making it impossible for them to continue carrying out banking activities safely and effectively.
The CBN listed the major reasons for the licence revocation to include:
Insufficient assets to meet financial liabilities;
Closure of business operations without obtaining prior approval from the Central Bank;
Prolonged inactivity and cessation of financial intermediation services;
Failure to commence operations within 12 months after receiving operating licences; and
Failure to maintain the minimum capital requirements as prescribed by regulatory authorities.
The apex bank explained that the enforcement action forms part of its broader supervisory strategy to sanitise Nigeria’s financial system by removing weak, dormant and non-compliant institutions from the banking landscape.
The regulator stressed that maintaining a healthy financial system requires strict adherence to prudential guidelines, corporate governance standards and capital adequacy requirements by all licensed financial institutions.
The CBN noted that the action is designed to safeguard depositors, preserve financial stability and ensure that only financially sound and properly governed institutions remain in operation.
The regulator reassured members of the public that it remains committed to building a resilient banking system capable of supporting economic growth while protecting the interests of customers and investors.
Industry analysts say the latest enforcement action underscores the CBN’s determination under Governor Olayemi Cardoso to deepen regulatory oversight and strengthen confidence in Nigeria’s financial sector through stricter compliance with banking laws.
They believe that while the revocation may temporarily reduce the number of licensed microfinance institutions, it will ultimately improve the quality, transparency and resilience of the sector by encouraging stronger governance, adequate capitalization and better risk management practices.
The Central Bank reaffirmed that it will continue to deploy appropriate supervisory and regulatory measures whenever necessary to ensure compliance with existing laws and to preserve public trust in Nigeria’s financial system.
The licence revocations became effective on July 1, 2026, marking another significant milestone in the CBN’s ongoing reforms aimed at creating a safer, stronger and more resilient financial services industry.            The Central Bank of Nigeria has revoked the licences of 46 microfinance banks over regulatory violations, inadequate capital, operational failures and financial weaknesses as part of efforts to protect depositors and strengthen Nigeria’s banking sector.