CBN issues draft guidelines for banks, OFIs on operating licence conversion

By Onome Amuge

The Central Bank of Nigeria (CBN),  has released an exposure draft of regulatory guidelines for change of operating licence for banks and Other Financial Institutions (OFIs).

The apex bank, in a circular signed by Chibuzo Efobi, director, financial policy and regulation department, CBN, dated march 28,2023, said the guidelines were drafted due to increasing requests from financial institutions to either upgrade or convert to other license regimes with the aim to provide clarity to eligible financial institutions on regulatory requirements.

The CBN further indicated that the guidelines were applicable to commercial banks, merchant banks, non-interest banks, microfinance banks, primary mortgage banks, payment service banks, and any other institution the regulator may designate from time to time.

According to the CBN, for any institution to be eligible for the operations, such institution shall be under the supervisory purview of the CBN; have no adverse supervisory report to its application; and satisfy any other condition which the CBN may stipulate from time to time.

However, for conversion, the institution must have been in operation for at least five years.

Highlighting prohibitions/restrictions which  applies to eligible banks and OFIs applying for conversion or re-categorization, the circular read, “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.”

The apex bank also gave stakeholders a period of three weeks from the date of the circular, to comment/make input on the guidelines, which could be addressed to its director of financial policy and regulation.