A Legal Opinion on the Mass CBN Microfinance Bank License Revocation
The Nigerian Financial Services subsector and the Nigerian public were surprised to receive news of a Federal Government Gazette dated the 22nd of May,2023 (Nos 93 & 94) under the former Mohammadu Buhari administration announcing the revocation of Banking and Finance company licenses issued by the Central Bank of Nigeria (CBN) to about 128 businesses.
This article will be in the form of a legal explanation on why the CBN took this disciplinary action.
The CBN is by virtue of the Central Bank of Nigeria Act in charge of issuing and revoking business licenses for almost banking and almost financial licenses in Nigeria and regarding Microfinance Banks, is empowered to provide further regulations, in this case the Revised Guidelines For the Supervision & Regulation of Microfinance Banks, that govern everything from licensing to operations and regulatory compliance requirements.
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As a result, the CBN highlighted and revoked the licenses of Microfinance Banks that were discovered to be in breach of the guidelines which prescribe license revocation for :-
– Business Inactivity.
– Insolvency.
– Failure to render regulatory compliance returns to the CBN.
– Closing shop (not actually carrying out any business operations).
– Failing to carry out any type of banking activity for which they were licensed for more than 6 months.
– Operating or carrying out financial services beyond the scope of their licenses e.g. International/Diaspora remittance support services (Digital Banks are most guilty of this practice).
This however does not mean that directors or owners/members of banks with such revoked licenses cannot reapply for new Microfinance licenses or other business licenses from the CBN except where they have committed an infraction of the guidelines warranting a restriction by the CBN from acting as directors in any business licensed by it.
Finance Law/Dispute Resolution :- The CBN Guide on How to Lodge a Customer Complaint
The Central Bank of Nigeria CBN, pursuant to an Automated Teller Machine (ATM) Helpdesk Expansion circular, outlined a new procedure for dealing with and lodging complaints by customers and members of the public against banks, Other Financial Institutions (OFIs), Primary Mortgage Institutions, and/or discount houses.
This article will be focused on outlining this procedure which goes this :-
Step 1– First report the complaint at the bank/branch where the dispute originated & then allow 2 weeks for the issues to be resolved.
Step 2– Where a resolution still has not been reached or the complaint has not been resolved by your bank, you can escalate your complaint by sending (through your lawyer preferably) a petition to The Director, Consumer Protection Department, CBN.
This step is also necessary when your bank fails to acknowledge your complaint within 3 days or issue a tracking number, or where the bank fails to attend to your complaint within the timelines stated by the CBN Consumer Protection Regulations (CPR).
You can only approach the CBN upon the failure of your bank to attend or resolve your customer complaint.
Step 3 – Your bank or Financial Institution will be contacted by the CBN and an investigation will be conducted into your complaint.
Step 4 – At this point you can then commence further legal proceedings against your bank in a supplementary capacity.
It should be noted that the steps outlined above will not apply when seeking to make a complaint or take legal action against the CBN itself.