CBN Upgrades OPay, Moniepoint and Others to National Licences

The Central Bank of Nigeria (CBN) has formally granted national status to the operating licences of a number of prominent financial technology companies and microfinance banks (MFBs).

Several significant fintech companies and microfinance banks, such as OPay, Moniepoint Group, PalmPay, Smartcash PSB, and Kuda, have had their licences upgraded by the Central Bank of Nigeria (CBN), granting them full national operating status.

At the annual committee of Heads of Banks’ Operations (CHBOs) conference in Lagos, Yemi Solaja, director of the CBN’s other financial institutions supervisory department, made the news.

According to Solaja, institutions must fulfil certain operational and compliance requirements in order to qualify for the upgrading, which is not automatic.

According to him, the regulator updated the licences of numerous digital lenders and payment platforms to better reflect their nationwide reach because they had grown far beyond the scope of their initial licences.

Major participants, such as Moniepoint Microfinance Bank, OPay, Kuda Bank, and others, now have national licenses that officially allow them to operate in all of the federation’s states rather than just a few.

The revised licences are intended to guarantee more stringent regulatory control over organisations functioning throughout Nigeria. Additionally, it seeks to require physical presence in strategic places so that clients in the unorganised sector can receive in-person assistance and dispute resolution.

As digital platforms assist in lowering large amounts of currency outside of the official banking system, it will also serve the central bank’s cashless and financial inclusion objectives.

The capital requirements for national MFBs have been raised to approximately N5 billion under the new regulations, from N2 billion under the previous regulations.

Stricter reporting and compliance requirements are also necessary to guarantee financial system stability and consumer safety. To help clients who might not be adequately served by internet channels alone, these companies should have physical branches or service centres in strategic places.

The majority of fintechs and microfinance banks used to be regulated as unit, state, or tiered operators, which meant they could only operate in particular regions. However, platforms such as Opay, Moniepoint, Kuda, and PalmPay swiftly surpassed those constraints, amassing sizeable clientele via mobile applications and agent networks throughout Nigeria.

According to the Central Bank of Nigeria (CBN), these companies’ real activities and their original licenses differed. The CBN is addressing this disparity by elevating them to national status, guaranteeing that their legal status corresponds with their real activity.

Customers need clarification on how to file complaints and settle disputes, particularly when financial services are provided online rather than through physical branches, according to the CBN.

These businesses will now have to deal with more stringent compliance regulations, increased capital needs, and more stringent oversight thanks to national licensing. For instance, compared to state or unit operators, national microfinance banks must maintain far greater capital levels.

As long as they operate within robust regulatory frameworks, the CBN views fintechs and agent networks, which already play a significant role in transferring money in underserved and rural areas, as essential tools for enhancing financial inclusion.

However, expectations are also raised by the upgrading. These businesses will now be required to uphold physical touchpoints in strategic locations, enhance customer support systems, and fortify internal controls, particularly with regard to know-your-customer (KYC) and anti-money laundering procedures.