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How to Obtain banking licence in Nigeria 

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How to Obtain banking licence in Nigeria 

Banking licence is a legal criterion for a financial institution that wants to embark on a banking business. Meanwhile, a business is not allowed to use the word like a bank, insurance, national in their name unless it holds a licence that is backing it up.

However, there are different types of banking licences, and they are:-

  • International banking licences: – This type of licence gives a bank to operation offshore banking activities and this forbids the bank from running any local business activities.
  • Full banking licences: – This licences gives authority to a bank to carry out general banking activities, such as taking deposits from the general public.

Moreover, the only types of banks that are allowed to carry on banking business in Nigeria are stated under BOFIA and they are:-

  • Merchant Banks
  • Commercial Banks
  • And other specialized banks like Mortgage banks, Non-interest banks, development banks and Microfinance banks.

Based on the banks specified under BOFIA, in Nigeria, licensed are given to operate as one of those banks mentioned above. However, your bank may be certified to embark on banking business on a regional and national basis in agreement with regulations, rules and guidelines on licensing, authorization, conduct and operation of business.

However, license are issued by Banking regulators of every country to applicants corporations that meet its banking requirements. Most times, the requirements used to include Minimum capital requirements, minimum number of directors, spreads of shareholdings, residence of shareholders, disclosure of beneficial shareholders and every other information that must should be provided.

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Besides, the general bank licence allows a bank to embark on all banking activities like asset management, retail banking, cash management, merchant acquiring and trading. And, you can also apply for offshore banking licence which is otherwise called international banking licence.

However, the major legislations regulating banking activities include:-

  • Central Bank of Nigeria Act 2007- this Act established the Central Bank of Nigeria as the body in charge of issuing banking licence in Nigeria.
  • The Central Bank of Nigeria (“CBN“) Regulations on Scope of Banking Activities & Ancillary Matters, No 3, 2010. This annulled the erstwhile Universal Banking Licence           regime and modified the scope and framework for banking business in Nigeria.
  • Companies and Allied Matters Act (“CAMA“) – Banks operating in Nigeria are corporate bodies which must be incorporated as a company in compliance with the requirements of CAMA.
  • The Banks and Other Financial Institutions Act (“BOFIA“) prescribes that all Banks must possess a valid license issued under BOFIA to carry on banking business in Nigeria.

Nevertheless, apart from Central bank of Nigeria, that is the primary regulator of banking activities in Nigeria, there are other statutory bodies that also exercise regulatory oversight on Nigeria banks. These other bodies are:-

  • The Securities and Exchange Commission (SEC):- This agency regulates capital market activities and public companies in Nigeria. Therefore a licensed bank which is a public     company or its affiliates tends to undertake capital markets activities. So there is no way,       they will not abide with one or two rules under SEC.
  • The Nigeria Deposit Insurance Corporation (NDIC):- This body has regulatory oversight over deposit money banks/Commercial banks (DMBs) and they are responsible for         insuring all deposit liabilities of licensed commercial banks and they also provide      assistance to insured institutions in the interest of depositors in cases of financial
  • The Financial Reporting Council of Nigeria:- This agency developed and enforced compliance with accounting, auditing, corporate governance and financial reporting      standards by public interest entities, which includes banks and other financial institutions.
  • The Corporate Affairs Commission:- This body is responsible for the incorporation of all corporate entities in Nigeria, which includes banks and other financial institutions.

For you to be given a banking licence, three stages will be involved and they are:-

  1. Grant of approval in principle
  2. Grant of final licence
  3. Pre-commencement of operation requirement


  1. Grant of Approval in Principle:- In order to get this first grant, you will submit a formal application for the grant of a licence. This application is addressed to the Governor of Central Bank of Nigeria. And in applying for this, you must submit the application alongside some other documents/particulars, which are:-
  • A feasibility report of your proposed Bank
  • A draft copy of the Memorandum and Articles of Association of your proposed Bank
  • A list of the shareholders, directors, and principal officers of the proposed Bank and their particulars
  • The prescribed application fee; and
  • Such other information, documents and reports as the CBN may, from time to time

Furthermore, after you have provided all the information, documents and the reports as required by CBN; the shareholders of your proposed bank shall deposit a sum equal to minimum paid-up capital with CBN. After you have paid the sum, the Governor of the Bank may issue a licence with or without conditions or might even refuse to issue a license to you.

  1. Grant of Final Licence:- 6 months after you have gotten the grant of Approval in Principle, the promoters of you proposed bank must submit application for the grant of a final licence alongside the following information, documents:
  • Recommended licensing fee
  • 3 certified true copies of Certificate of Incorporation of the Bank, Memorandum and       Articles of Association, Form CAC 2 (Allotment of shares) and Form CAC 7 (Particulars       of Directors) of the Bank;
  • Evidence of location of head office/branch building for the take-off of banking business;
  • Evidence of strong room, loading bay and banking hall facilities;
  • Bullion lorries with necessary security gadgets;
  • Evidence of installation of I.T. facilities/computerization;
  • Copies of letters of offer and acceptance of employment in respect of the management team

Pre-Commencement of Operative Requirements:- At this stage, where your proposed bank has been granted a Final license for banking, there are some documents you will submit to Central Bank of Nigeria (CBN) to inform them of your readiness to commence operations and the documents are:-

  • Copy of Shareholders register
  • Copy of share certificate issued to each investor
  • Evidence of admission into the clearing house
  • Draft copy of opening statement of affairs signed by the directors and auditors
  • Evidence of insurance coverage and the insurance policies
  • Evidence of readiness of cheques and other security document
  • Evidence of adequate security arrangements
  • Minutes of Pre-Commencement Board Meeting

After meeting up with all the required stages, Central Bank of Nigeria (CBN) will carry out due diligence to be sure they are dealing with someone the public can trust. And as soon as they determine the fact that you can be trusted with public funds, banking license will be granted to you.

Finally, the holder of a commercial banking licence has the authority to:-

  • Take deposits;
  • maintain current and saving accounts;
  • provide finance and credit facilities, retail banking, treasury management, custodial, and financial advisory (incidental to commercial banking services) services; and
  • Deal in foreign exchange.

Also, in the case of a bank with merchant banking licence; any bank granted this licence  is allowed to:-

  • Take deposits (not below 100 million naira per tranche);
  • provide finance and credit facilities;
  • Deal in foreign exchange;
  • Act as an issuing house or otherwise arranging issuance of securities; and
  • Provide custodial, underwriting and treasury management services.

Also, any Nigerian bank that want to open an offshore subsidiary is under compulsion to   have been in sound financial condition (in terms of liquidity, capital adequacy, etc.) for at least the past 12 months, and must have operated profitably for the past two years, as reflected in the audited financial statements of such applying bank. The Nigerian bank is also required, as part of the application process, to give details of how the operation of the offshore subsidiary would be supervised from Nigeria.

About the Writer

Olusipe Abiodun Yinka is an Audit Associate in Bulls Capital Limited. He has a National Diploma in Accounting from Abraham Adesanya Polytechnic, Ijebu-Igbo, Ogun State; as well as a Degree in Accounting from Alex Ekwueme Federal University, Ebonyi State. He is a creative copywriter and a Trendsetter. Apart from writing, Olusipe is also an entertainer.

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