The Central Bank of Nigeria (CBN) has prohibited banks and other financial institutions seeking a conversion license from expanding or reducing their existing banking networks under its new draft guidelines.
In a circular labeled “FPR/DIR/PUB/CIR/001/072” and titled “Regulatory Guidelines for Change of Operational License for Banks and Other Financial Institutions in Nigeria,” dated March 28, 2023, the CBN shared this information with banks and other financial institutions. The draft was signed by Chibuzor Efobi, Director of the Financial Policy and Regulation Department.
According to the circular, several prohibitions and restrictions will apply to eligible banks and other financial institutions (OFIs) seeking conversion or re-categorization. These institutions may not expand or reduce their current banking network while their application is pending.
Furthermore, they are not allowed to launch new products or services, undertake new strategic banking activities (except for settling rights and obligations under existing terms and conditions), or make any business decisions after initiating the conversion process unless in line with the conversion strategy submitted to the CBN. Additionally, they may not engage in any banking activity specific to the proposed new license or any other requirement that the CBN may prescribe from time to time.
The CBN explained that the draft guidelines were developed in response to a growing number of requests from financial institutions to upgrade or convert to different licensing regimes. The goal is to provide clarity on regulatory requirements for eligible financial institutions.
