NAVIGATING CHANGE: THE SENATE’S PROPOSED AMENDMENT TO THE BANKS AND OTHER FINANCIAL INSTITUTIONS ACT (BOFIA)…

The Senate has held a public hearing, hereinafter referred to as “The Hearing”, on a Bill for an Act to amend the Banks and Other Financial Institutions Act, No. 5 of 2020 (SB959), hereinafter referred to as “The Bill”. The hearing, held on Wednesday, 4th March 2026, was led by Senate leader Opeyemi Bamidele, who represented the Senate President. The session was characterised by the need to amend the Banks and Other Financial Institutions Act, “the Act,” to accommodate technology-enabled financial service providers.

This newsletter will explore the Senate’s initiative to amend the Banks and Other Financial Institutions Act, as well as provide insights into the proposed area(s) of amendment.

An Overview of the Act

The Act, which is the primary legislation regulating the banking sector and other financial activities in Nigeria, was signed in 2020. It provides the scope for the Central Bank of Nigeria’s (CBN’s) supervisory powers over banks, specialised banks, and other financial institutions. It also regulates the issuance of banking licences to ensure efficiency and align the financial sector with international best practices, while ensuring the protection of consumers and maintenance of public confidence in the financial system.

Key Aspects of the Proposed Bill

The bill proposes the following amendments to the act;

1. Fintech Regulation: It aims to modernise the already existing regulatory framework to reflect the rapid growth of the fintech sector by formally integrating fintech oversight into the act. Thereby creating a more stable, transparent, and secure financial ecosystem, offering several positive impacts on fintech regulations. Essentially,a more robust statutory regime managed by the CBN will be established to incorporate fintechs and digital financial institutions.
2. Establishment of a Fintech Regulation Committee:The bill proposes the establishment of a Financial Services Regulation Coordinating Committee for coordination and the supervision of financial institutions. The committee shall consist of a chairman, the Managing Director of the Nigerian Deposit Insurance Commission, the Director General of the Securities and Exchange Commission, the Commissioner for Insurance, the Registrar General of the Corporate Affairs Commission, and a representative of the Federal Ministry of Finance.
3. Systemically Important Institutions (SIIs): The amendment seeks to empower the CBN to designate, register, and regulate non-bank fintech firms as SIIs if they are deemed critical to the financial system. On designation, these SIIs will be subject to heightened supervision, including mandatory adherence to strict governance, cybersecurity, and data sovereignty standards. It furtherproposes a six-month provisional designation for existing institutions deemed systemically important by the CBN to allow them to align with new regulations.
4. Crackdown on Ponzi Schemes: The bill introduces stricter measures to combat fraudulent investment platforms and Ponzi schemes, with proposed penalties of up to 10 years in prison, minimum fines of ₦20 million for operators of illegal schemes, and asset freezing. A national registry is proposed to improve transparency and mandate disclosure of beneficial ownership, and the CBN will be empowered to collaborate with other regulatory agencies for better, risk-based supervision.
5. Inter-Agency Collaboration:A formal collaboration on fintech oversight is proposed, rather than creating a new, separate regulator for fintechs. The bill mandates robust coordination between the CBN and other agencies, including the Securities and Exchange Commission (SEC), Nigerian Communications Commission (NCC), National Information Technology Development Agency (NITDA), Corporate Affairs Commission (CAC), and the Federal Competition and Consumer Protection Commission (FCCPC).

Conclusively, the amendment focuses on creating a “risk-based” supervisory framework, ensuring that the regulation of technology-driven financial services is integrated into the CBN’s core functions rather than creating a separate, fragmented regulator. It also aims to resolve and safeguard financial stability while promoting responsible innovation in Nigeria’s fast-evolving digital economy.