Central Bank of Nigeria Revised Guidelines For Finance Companies In Nigeria

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The Finance Company sub-sector was envisioned to operate within the middle tier of the financial system, with a focus on the Micro, Small and Medium Enterprises (MSMEs) segment. The sub-sector was to play complementary roles to banks, bridging financing gaps and meeting the financial needs of its target customers. However, Finance Companies have not demonstrated the necessary capability to thrive in this space which has resulted in a largely underperforming sub-sector – a situation of concern to the Central Bank of Nigeria [hereinafter referred to as “the CBN” or “the Bank”] and other key industry stakeholders.

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As part of the initiatives to establish financial stability within the Financial Services Industry and the Finance Company sub-sector, the CBN undertook a review of the Guidelines for Finance Companies. These Revised Guidelines are issued by the CBN in exercise of the powers conferred on it by the Central Bank of Nigeria Act of 2007 [hereinafter referred to as “the CBN Act”] and the Banks and Other Financial Institutions Act of 2004 [hereinafter referred to Act “the BOFIA”]. The Revised Guidelines are to regulate the establishment, operations, and other activities of Finance Companies.