The business of digital lending has been one of the most positively disruptive intrusions into the Nigerian finance sector, checking the process of loan applications that in the past used to take a lot of time and a lot of bottleneck as well as cumbersome disbursement procedures.
Leveraging on just mobile telecommunications, digitally sourced credit ratings, and online-base KYC (Know Your Customer) checks, online lending has bloomed into one of the most active areas of fintech in Nigeria, but not without its own problems.
Many digital lenders have proven to be very unethical and unscrupulous, becoming nothing more than glorified loan sharks using totally unsavory recovery measures like public shaming and damaging cyber-defamation in the form hacking into the contact lists of their defaulting borrowers and harassing close contacts to repay those loans while spreading false and scandalous allegations about these hapless customers.
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This has led to the introduction of further regulatory checks and a new licensing framework governed by the Federal Competition and Consumer Protection Commission (FCCPC) which decided to do something about the avalanche of complaints and petitions from aggrieved victims of digital loan sharks.
This article will be looking at the most important provisions of the 2022 FCCPC Digital Lending Regulations/Registration Guidelines & what they mean for techpreneurs and finance experts going forward.
Which regulatory agency now has jurisdiction over the registration of digital lenders in Nigeria?
Digital lending is now regulated by :-
– The Ministry of Home Affairs of various states.
– The FCCPC
– The Corporate Affairs Commission (CAC)
– The Central Bank of Nigeria (CBN)
What are the requirements for the registration of digital lenders with the FCCPC?
After initial registration with the CAC and CBN or state ministry of home affairs, a prospective digital lender is to provide the following requirements :-
– A completed form DLG 001 which should contain :
- The name of the lender
- Its physical address
- Website
- Telephone numbers
- The identities & nationalities of promoters, directors & initial key role players of the lending company
- Affiliations with any other companies, institutions or similar businesses, whether domestic or global
- Consultants, agents or any person assisting with the registration process, operations or management of the lending company
- Bankers of the company
- Proposed interest rate regime and loan balance calculation methodologies
- A list of all loan apps in operation or intended for operation.
Are there any further documents required for a digital lending company registration?
Yes there are. Some of these documents include the following :-
- A certified copy of the certificate of incorporation of the applicant
- A brief description of the business of the applicant
- Organogram showing role players and location of key role players & any operational person of authority in the company.
- An FCCPC Interim digital lending guidelines form 002 (Declaration For Digital Lending Businesses in Nigeria)
What is the minimum share capital for lending companies in Nigeria?
The minimum share capital for lending companies in Nigeria remains 20 Million Naira.