The Procedure for the Acquisition of a Bank Operation License in Nigeria and the Revocation of Licenses

Contributor: Joy Ayara Esq.

The need to save money, manage expenses and protect our money from being stolen has led to different saving methods like putting money in the mattress, piggy banks (Asusu), envelop budgeting system, putting money in cans and finally the establishment of the modern-day banks. The need for banks in our society cannot be overemphasized. It has over the years proven to be the most effective method to save money and protect it from being stolen. This can be a direct consequence of the strict regulations as regards the operations and management in the banking sector, as it involves the keeping of monies owned by the public.

This article seeks to provide an exposition on the steps in acquiring the license to operate a bank in Nigeria, as well as the documents required for this purpose, and the instances where such licenses may be revoked by the issuing authority.


The Banks and Other Financial Institution Act (BOFIA) 2020,[1] is the principal legislation in charge of issuing the license to operate a bank in Nigeria, while the Central Bank of Nigeria (CBN) is the body saddled with the responsibility of giving full effect to the provisions of the BOFIA, which includes the issuing of license to operate a bank in Nigeria.[2]

In 2020, the CBN made provision for the Guideline for Licensing and Regulation of Payment service Banks in Nigeria to regulate the licensing procedure. Therefore, any person desirous of undertaking a banking business in Nigeria must take steps to register as a company and acquire the relevant license. In addition, anyone who carries on the business of Banking without first acquiring the license for it, commits an offence and is liable upon conviction, to an imprisonment term of not less than or a fine of 50, 000 000.00, or two times the cumulative of the deposit called, or both the fine and imprisonment.[3]

There are three stages for applying and granting a license for the operation of a commercial bank in Nigeria. They are:

  1. Grant of approval in principle.
  2. Grant of a final license.
  3. Pre-commencement of operation requirement.


An application for the grant of license is made to the Governor of CBN in writing, by the promoters of the prospective bank. Such application will be accompanied by the following documents:[4]

  1. A non-refundable application fee of 500 000.00 Naira only on bank draft, payable to the CBN, or such other amount the CBN may specify from time to time;
  2. Deposit of minimum capital of 25 billion Naira to the Central Bank of Nigeria on application, with evidence of deposit by each shareholder;
  3. Evidence of capital contribution made by each Shareholder;
  4. A feasibility report of the proposed bank, including the schedule of services to be rendered and financial projections for at least 5 years;
  5. A draft copy of the memorandum and articles of association of the proposed bank;
  6. A list of Shareholders, Directors and Principal Officers of the proposed bank and their particulars;
  7. In the case of a non-interest bank, a list of experts on non-interest banking or finance that will serve as its advisory committee of experts;
  8. And such other information, documents and reports as the CBN may specify.

After application and submission of the above documents and reports, the shareholders of the proposed bank shall deposit with the CBN, a sum equal to the minimum paid-up share capital that may be applicable under the BOFIA.[5] Upon payment of the sum, the Governor may with the approval of the Board, grant a license with or without conditions or may refuse to grant a license. The Governor need not give reasons for the refusal to grant a license.[6]


Not later than 6 months after the grant of Approval in Principle, the promoters of the proposed bank will apply for the grant of a final license with the following documents:

  1. Non-refundable licensing fee of 2, 000, 000.00 Naira only payable in bank draft to the CBN.
  2. 3 certified true copies of Certificate of Incorporation of the Bank, Memorandum and Articles of Association, Form CAC 2 (Allotment of shares) and Form CAC 7 (Particulars of Directors) of the Bank;
  3. Evidence of the location of head office/branch building for the take-off of banking business;
  4. Evidence of strong room, loading bay and banking hall facilities;
  5. Bullion lorries with necessary security gadgets;
  6. Evidence of installation of I.T. facilities/computerization;
  7. Copies of Offer letters and acceptance of employment in respect of the management team, and their details and resume.
  8. Evidence to meet technical requirements and modern infrastructure facilities such as office equipment, computers, telecommunications, etc.

As a requirement to grant the final license, the CBN will conduct an inspection of the premises and facilities of the proposed bank to:

  1. Check the physical structure of the office building and infrastructure provided for the takeoff;
  2. Check the originals of the documents submitted for sighting;
  3. Meet with the board and management team whose Resumes had been submitted earlier;
  4. Verify the capital contributions of the promoters; and
  5. Verify the integration of its infrastructure with the National Payment Systems.


Where the proposed bank has been granted a final license for banking business, it will submit the following documents through a letter, before the commencement of business informing CBN of its readiness to begin operation;

  1. Evidence of admission into the clearinghouse;
  2. Copy of Shareholders register;
  3. Copy of share certificate issued to each investor;
  4. Draft copy of the opening statement of affairs signed by the directors and auditors;
  5. Evidence of insurance coverage and the insurance policies;
  6. Evidence of readiness of cheques and other security documents;
  7. Minutes of Pre-Commencement Board Meeting;
  8. Evidence of adequate security arrangements.


The Governor of the CBN, with the approval of the Board and a notice published in the Federal Government Gazette or print and electronic media, can revoke a license to operate a bank in Nigeria under specified situations.[7] The following are examples of when a license may be revoked.

  1. Where the bank ceases to carry on the type of banking business for which it was licensed to carry on for any continuous period of six months, or any period aggregating six months during a continuous period of twelve months in Nigeria;
  2. Where the bank goes into liquidation;
  3. Where the bank fails to comply with any condition subject to which the license was granted;
  4. Where the bank has insufficient assets to meet its liabilities;
  5. Where the bank conducts its business in an unsound manner or its directors engage in unsafe practice;
  6. Is involved in a situation, circumstance, action or inaction which constitutes a threat to financial stability;
  7. Where the bank fails to comply with any obligation imposed upon it by or under the BOFIA, or the Central Bank of Nigeria Act, or any other rule, regulation, guideline or directive made;
  8. Where the bank in the opinion of the Central Bank of Nigeria is critically undercapitalized with a capital adequacy ratio below the prudential minimum or such other ratio as the CBN may prescribe;
  9. Where the bank fails to commence banking operation within 12 months after the grant of a license;
  10. Where the bank fails to comply with the provision of sections 9 and 13 of the BOFIA.

Where the license of a bank has been revoked, the Governor of CBN will appoint the Nigeria Deposit Insurance Corporation (NDIC) as a liquidator of the bank whose license has been revoked.[8] The NDIC will immediately proceed with the liquidation of the bank and payment of assured deposit liabilities.[9] However, any bank that wants to institute an action to challenge the revocation of license on any ground, must do so at the Federal High Court within 30 days from the date of revocation.[10]

This action and any appeal emanating from it will be heard in an expedited and accelerated Hearing.[11] The bank whose license has been revoked can only get remedy in monetary compensation, not more than the equivalent of the value of the paid-up capital of the bank, at the time of the revocation of the license.[12]


The need to regulate the banking sector and the strict requirements for engaging in it cannot be over-emphasized. This can be linked to the fact that it deals with the safekeeping of monies belonging to the general public.

The standards for establishing a bank in Nigeria may appear rigorous, but they are necessary in order to provide competence, accountability and expertise to the bank’s customers. These legislations regulating the banking sector have been the major source of protection in the banking sector and have helped boost the confidence of customers. Any company with intentions of venturing into the Banking sector must ensure that the company complies with the requirements necessary to obtain the relevant licenses.

It is important to note that even after obtaining the necessary licenses, the company must continue to verify that the banking business it conducts is always in compliance with all applicable regulations. As a result, it is imperative that expert assistance be sought, both prior to the company’s incorporation and during the course of the banking operation.


  1. Cap B3, Laws of the Federation of Nigeria, 2004
  2. Section 1(1) BOFIA 2020
  3. Section 2 (1) (2) BOFIA 2020
  4. Section 3 (1) BOFIA 2020
  5. Section 3 (2) BOFIA 2020
  6. Section 3 (3) BOFIA 2020
  7. Section 12 (1) BOFIA 2020
  8. Section 12 (2) BOFIA 2020
  9. Section 12 (3) BOFIA 2020
  10. Section 12 (5) BOFIA 2020
  11. Section 12 (4) BOFIA 2020
  12. Section 12 (6) BOFIA 2020

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