The Central Bank of Nigeria (CBN) has recently announced the possible upgrade of the operating licences of major Financial Technology Companies (Fintech) and Microfinance Banks (MFB’s) to national status.

This upgrade is not a blanket change for all licence classes but a targeted shift for players whose digital operations have expanded nationwide, necessitating higher regulatory oversight and stricter compliance.  Additionally, the upgrade is not automatic and is contingent on regulatory assessment and compliance with enhanced prudential and governance standards.

CBN officials indicated at a January 2026 industry forum that the move is necessitated by the expanded scope of the operations of these institutions beyond their original licences. Citing a few existing institutions, he further stated that their operations are nationwide and that they are subject to formal CBN approval and issuance of applicable licence authorisations.

This newsletter provides an overview of the significance of this upgrade, its benefits, and the requirements for maintaining national status.

Significance of National Status

The development subjects these institutions to closer supervision, enhanced prudential requirements, and stricter compliance obligations, aimed at safeguarding financial stability, consumer protection, and systemic resilience. It will also support the Central Bank’s cashless and financial inclusion goals, as digital platforms help reduce the volume of cash outside the formal banking system.

Importantly, institutions operating under national MFB authorisation and other CBN-regulated digital financial services licence categories remain distinct from commercial Deposit Money Banks (DMBs) and do not enjoy universal banking powers. The CBN also used the forum to push for closer collaboration between commercial banks and FinTechs, particularly to reduce the volume of cash circulating outside the formal banking system.

Regulatory and Operational Implications

As a result, the relevant Fintechs and MFBs are expected to meet specific requirements and compliance standards before their licences are granted. These requirements include, but are not limited to, the following:

1.     Capital Requirements

National MFBs to be upgraded to national status are expected to maintain a minimum capital base of ₦5 billion, consisting solely of paid-up share capital and share premium. Retained earnings and general reserves do not qualify for this threshold.

2.     Operational Scope and Branching

National status permits operations across all 36 states of the Federation. However:

1. Prior written approval of the CBN is required before the establishment of each branch.
2. The institutions must maintain physical offices in strategic locations, particularly for dispute resolution and engagement with informal or underbanked customers.

3.     Regulatory Reporting and Compliance

The upgraded institutions will be subject to enhanced reporting obligations, including:

1. Monthly returns on assets and liabilities;
2. Disclosure of credits to directors, management, and related parties;
3. Compliance with the Nigeria Data Protection Act 2023 under the supervision of the Nigeria Data Protection Commission in ensuring the protection of data and security of customer funds, including the appointment of a Data Protection Officer and periodic audits;
4. Stricter adherence to KYC and AML/CFT obligations, consistent with CBN AML/CFT Regulations and reporting to the NFIU.

4.     Consumer Protection

The upgraded institutions are expected to further strengthen and be subject to multi-layered consumer protection oversight by the CBN and the Federal Competition and Consumer Protection Commission (FCCPC). This includes compliance with:

1. Fair-lending and transparency standards;
2. Ethical debt-collection practices; and
3. Disclosure obligations relating to pricing, interest, and fees.

5.     Corporate Governance

The composition of the Board must continually comply with the CBN Code of Corporate Governance for MFBs, which requires fit-and-proper checks for directors and management to be conducted as strictly as possible.

Also, there is continuous adherence to the mandatory appointment of a qualified Compliance Officer, often a top-level manager, to oversee compliance with strict Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT) laws, including filing reports on large cash transactions and suspicious activities with the Nigerian Financial Intelligence Unit (NFIU).

6.     Risk Management

The upgraded institutions must continue to maintain a robust enterprise-wide risk management framework covering:

1. Credit, liquidity, operational, market, legal, and reputational risks;
2. Oversight of technology risk, including algorithms, data security, and change management; and
3. Board-approved risk appetite and internal controls.

7.     Competitive Advantage

With national status, these upgraded Fintechs face intensified competition, as they are better positioned to compete with tier-one commercial banks for deposits, salary accounts, and corporate services.

Effect of Non-Compliance with Statutory Requirements

Failure to comply with statutory and regulatory requirements may attract administrative penalties, fines, and operational restrictions from the CBN, largely driven by the Banks and Other Financial Institutions Act (BOFIA) 2020 and various regulatory circulars. Some of which include:

1. Monetary penalties in the form of direct debit fines, imposition of large-scale fines/daily fines for continued non-compliance;
2. Suspension of specific operations; and
3. Revocation of licence for serious or repeated infractions, particularly relating to payments, AML/CFT breaches, or failure to report suspicious transactions

In summary, this change aims to align the regulation of these institutions with their actual nationwide presence, strengthen the stability of the Nigerian financial system, and ensure tighter regulatory oversight of their operations throughout Nigeria. However, these institutions must meet heightened capital, governance, and compliance standards to retain this status.