The Central Bank of Nigeria has revoked the operating licences of 46 microfinance banks across the country with effect from 1 July 2026, citing the failure of the affected institutions to meet key regulatory requirements for continued operation. The action, approved by CBN Governor Olayemi Cardoso under Sections 12 and 13 of the Banks and Other Financial Institutions Act 2020, forms part of the regulator’s ongoing drive to strengthen the stability of Nigeria’s financial system and protect depositors.
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Why the licences were revoked
The CBN identified five grounds for revocation across the affected institutions: insufficient assets to meet liabilities, closure of operations without prior regulatory approval, prolonged inactivity and cessation of financial intermediation, failure to commence operations within 12 months of receiving a licence, and failure to maintain the required minimum capital unimpaired by losses.
Kano State accounted for the largest share of the 46 revocations with 13 institutions, followed by Lagos with 8. The affected states also include Abia, the FCT, Kaduna, Kebbi, Niger, Ogun, and Plateau with two banks each, while Anambra, Akwa Ibom, Bayelsa, Benue, Cross River, Delta, Kwara, Ondo, Osun, Oyo, and Rivers each had one institution affected. By tier, 25 of the revoked institutions were Tier 2 microfinance banks, 18 were Tier 1, and three were state microfinance banks.
Revoking 46 licences in a single action is not a routine supervisory step. It reflects the CBN’s willingness to clear institutions that exist on paper but no longer serve any functional financial purpose — a necessary but disruptive move in a sector that many Nigerian SMEs depend on for grassroots credit.
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The broader context
The revocations follow the CBN’s banking sector recapitalisation programme, which concluded on 31 March 2026 and required commercial banks to meet significantly higher minimum capital thresholds. The regulator has signalled that the same principles of capital adequacy and operational viability apply across all tiers of the financial system — from large commercial banks to community microfinance institutions.
The Nigeria Deposit Insurance Corporation has separately confirmed that more than 281 million depositor accounts across the banking system are currently insured, following reforms that expanded deposit coverage and accelerated reimbursement for customers of failed institutions. The NDIC currently provides insurance across 914 licensed financial institutions, with over 98 per cent of depositors fully covered for their entire balances.
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What it means for SMEs
Microfinance banks occupy a specific and important position in Nigeria’s credit ecosystem. They serve the smallest businesses, market traders, artisans, and rural entrepreneurs who do not qualify for commercial bank products and have historically been the only formal source of credit at the community level. The loss of 46 institutions — however operationally compromised — narrows that access point further.
A microfinance bank that has ceased to lend is not protecting the communities it was licensed to serve. But the businesses that depended on it, even imperfectly, now have fewer options in an environment where affordable credit is already in short supply.
The CBN has reaffirmed its commitment to maintaining a sound and resilient financial system and said it will continue taking supervisory actions where necessary. For the small businesses left without their community lenders, the challenge now is finding alternatives in a formal credit market that has consistently struggled to reach them.
