CBN’s Revocation of Microfinance Bank Licenses Signals Serious Regulatory Concerns — Economist Warns

An economist has described the Central Bank of Nigeria’s decision to revoke the operating licences of 46 microfinance banks as an indication of serious regulatory and financial concerns within the affected institutions.

The CBN announced on Wednesday that it had withdrawn the licences of the banks with effect from July 1, 2026, after they failed to meet the regulatory requirements for continued operations under the Banks and Other Financial Institutions Act (BOFIA), 2020.

Among the affected institutions are 13 microfinance banks based in Kano State, raising concerns among customers, depositors and small business owners who rely on the banks for access to credit.

Speaking with DAILY POST, economist and lecturer in the Department of Economics and Development Studies at the Federal University Dutse, Dr Abdulnasir Turawa Yola, said the apex bank would not revoke a financial institution’s licence without identifying serious shortcomings.

“Whenever a bank’s licence is revoked, it means the CBN has detected a problem. It could be that the institution no longer meets the required capital base, or it may be facing serious management and corporate governance challenges,” he said.

He explained that although the Nigeria Deposit Insurance Corporation (NDIC) provides protection for depositors, customers may still suffer financial losses depending on the amount held in the failed institutions.

“When a bank’s licence is withdrawn, there are consequences. Although the NDIC compensates depositors, it is not always 100 per cent of their funds. Creditors are usually settled first, followed by depositors, while shareholders are often the last to be considered,” he added.

The affected Kano-based institutions include Zain Microfinance Bank, Bompai Microfinance Bank, Ajwa Microfinance Bank, NOW Digital Microfinance Bank, Minjibir Microfinance Bank, Shanono Microfinance Bank, Sumaila Microfinance Bank, Rimin Gado Microfinance Bank, Sycamore Microfinance Bank, Tofa Microfinance Bank, Kanopoly Microfinance Bank, Bellbank Microfinance Bank and Esteem Microfinance Bank.

While some residents believe the closures will have limited impact because the banks serve relatively small customer bases, others fear the development could reduce access to affordable loans.

A small-scale trader, Ibrahim Sulaiman, said microfinance banks play a vital role in supporting entrepreneurs.

“These banks often give us loans without much difficulty. Commercial banks have stricter conditions, making it hard for people like us to qualify,” he said.

Officials of the affected banks were unavailable for comment.