The Central Bank of Nigeria (CBN) has revoked the operating licences of 46 microfinance banks across the country, even as it issued fresh guidance limiting the suspension of payment, delivery obligations and termination rights under financial contracts involving failing banks and other financial institutions to two business days.

The licence revocation, the latest exercise of the apex bank’s regulatory powers to weed out non-performing and non-compliant financial institutions from the sector, was disclosed in a statement yesterday, signed by its Acting Director, Corporate Communications Department, Hakama Sidi-Ali. It noted that the revocation took effect from July 1, 2026, in line with the CBN’s powers under Sections 12 and 13 of the Banks and Other Financial Institutions Act (BOFIA), 2020.

According to the statement, the action was approved by the Governor of the CBN, Olayemi Cardoso, following the affected banks’ failure to meet the regulatory requirements for continued operation as licensed financial institutions.

The apex bank listed five possible grounds for the revocation, noting that the affected banks fell short on one or more of the conditions. These include insufficient assets to meet liabilities, closure of operations without CBN’s approval, inactivity and cessation of financial intermediation, failure to commence operations within 12 months of licence approval, and failure to maintain minimum capital funds unimpaired by losses.

The CBN said the revocation forms part of its ongoing efforts to safeguard the stability of the financial sector, protect depositors and ensure that licensed institutions comply with extant laws and regulatory requirements.

“The Central Bank of Nigeria remains committed to promoting a safe, sound and resilient financial system and will continue to take appropriate supervisory and regulatory actions, where necessary, to maintain public confidence in the Nigerian financial system,” the statement read.

A breakdown of the list of affected institutions, seen by The Guardian, showed that Kano State alone accounted for 13 of the 46 microfinance banks whose licences were withdrawn, the highest concentration of any state, followed by Lagos with nine. The affected banks cut across Tier 1, Tier 2 and state microfinance bank categories, an indication that the regulatory clean-up was not limited to smaller, unit microfinance banks but also touched institutions with wider capital and operational thresholds.

Among the Kano-based lenders affected are Bompai MFB, Minjibir MFB, Shanono MFB, Sumaila MFB, Rimin Gado MFB, Sycamore MFB, TOFA MFB, Kanopoly MFB, Esteem MFB, as well as Zain MFB (formerly Dawakin Tofa MFB) and Ajwa MFB (formerly Gezawa), both of which had undergone name changes before the revocation. Bellbank MFB, formerly Tsanyawa MFB, also makes the list, similarly rebranded before losing its licence.

In Lagos, the affected institutions include Gold MFB, Chanelle MFB, Safegate MFB, Supreme MFB, Creditville MFB, MBAG MFB, Verdant MFB and Enterpreneur MFB.

Other states with affected microfinance banks include Niger (Busu MFB and Bejin-Doko MFB), Ogun (Iwade MFB and Apple MFB), Kebbi (Kamba MFB and Zuru MFB), Kaduna (Zafec MFB and Basawa MFB), and Abuja (Winview MFB and Casha MFB), among others spread across Rivers, Abia, Kwara, Bayelsa, Delta, Oyo, Cross River, Plateau, Uyo, Anambra, Benue, Ondo and Osun states.

Yesterday’s action is the latest in a series of licence withdrawals the CBN has carried out in recent years as it tightens oversight of the microfinance sub-sector, a segment of the financial system that has struggled with weak capitalisation, poor corporate governance and, in many cases, outright abandonment of business operations by promoters.

The most sweeping of such exercises came in May 2023, when the apex bank, then under Governor Godwin Emefiele, revoked the licences of 179 institutions comprising microfinance banks, finance companies and primary mortgage banks, of which 132 were microfinance banks.

The CBN had explained then that the affected institutions had either ceased operations for a continuous period of six months, failed to fulfil the conditions attached to their licences, or failed to meet obligations imposed on them under BOFIA 2020.

In a related development that underscores the apex bank’s tightening grip on troubled institutions, the CBN, in a circular issued yesterday to all banks and other financial institutions, provided interpretative guidance on the practical operation of Sections 34(2)(b) and 40(2) of BOFIA, limiting the suspension of payment, delivery obligations and termination rights under contracts involving failing institutions to two business days.

The circular, signed by the Acting Director of the Financial Markets Department, Okey Umeano, takes immediate effect. According to the CBN, the absence of a defined maximum duration for the exercise of its powers under the relevant provisions of BOFIA had created uncertainty for counterparties dealing with Nigerian banks and other financial institutions in financial contracts, a situation it said had the potential to impede the effective management of commercial risk, making it necessary to spell out how the provisions will be applied in practice.

The apex bank explained that the circular is intended to guide banks, financial institutions and counterparties to affected contracts on the approach it will adopt when exercising the powers granted to the CBN Governor under the Act. For the circular, the CBN defined an “Affected Contract” as any contract to which a bank or other financial institution is a party and which falls under Sections 34(2)(b) or 40(2) of BOFIA.

The regulator said the interpretative guidance was being issued pursuant to the powers granted to the CBN Governor under Section 56 of BOFIA and Section 33(1)(b) of the Central Bank of Nigeria Act, 2007.