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The Central Bank of Nigeria (CBN) has issued new guidelines for financial institutions seeking to upgrade or convert their licenses.
The guidelines were created in response to increasing requests from institutions looking to provide more clarity on regulatory requirements.
The guidelines apply to commercial banks, merchant banks, non-interest banks, microfinance banks, primary mortgage banks, payment service banks, and any other institution designated by the CBN.
The guidelines prohibit eligible banks and other financial institutions from expanding or reducing their current banking network, rolling out new products and services, or engaging in any new strategic banking activity during the conversion process.
The institutions are also required to submit a conversion strategy to the CBN and adhere to any other requirements prescribed by the regulator.
The guidelines aim to manage the trend of financial institutions transitioning to holding companies or digital banks offering microfinance services.
Part of the circular reads:
“Under these Guidelines, the following prohibitions/restrictions shall apply to eligible banks and OFIs applying for conversion or re-categorization.
“The bank or OFI shall not, pending when the application is determined: expand or reduce its current banking network; roll-out new products and services; carry out any new strategic banking activity but the settlement of rights and obligations shall continue until extinguished in accordance with existing terms and conditions.
“Take any business decision after the conversion process has commenced, except in line with the bank’s conversion strategy submitted to the CBN; engage in any banking activity specific to the proposed new license; any other requirement that may be prescribed from time to time by the CBN.”
This article was updated 7 days ago
