Regulatory Alerts2007-06-28 | OFID-04-2007Guidelines for Finance Companies
Here are the key points for starting a microfinance bank in Nigeria: 1. **Incorporate your business:** Your first step is to incorporate your business as a limited liability company (LLC) with the Corporate Affairs Commission (CAC). The CAC registration involves reservation of the name, incorporation of the company, and obtaining a certificate of incorporation. 2. **Obtain a Business Name approval from the Central Bank of Nigeria (CBN):** Get an approval in writing from the CBN to operate as a microfinance bank. The application should include: * Your business plan which must comply with the Guidelines for Licensing of Microfinance Banks in Nigeria, provided by the CBN. 3. **Obtain a license:** After you have complied with all the conditions mentioned in the guidelines, you would need to apply for a license from the CBN. The process involves submitting an application form and necessary documents as outlined in the guidelines. 4. **Appoint competent management staff:** Make sure that your team is qualified and experienced enough to manage a financial institution. Your chief executive officer (CEO), managing director (MD), deputy managing director (D-MD), compliance officer, and other key positions should all have at least a bachelor's degree in finance, business administration, or a related field. 5. **Establish your office:** Find an appropriate location to set up your microfinance bank. Your office should be well-equipped with necessary furniture, modern equipment for financial transactions (e.g., computers, servers), and adequate security measures. 6. **Create customer accounts:** Start creating individual or small business accounts. These accounts will be used by customers to deposit funds or acquire other financial services from your institution. 7. **Obtain regulatory approvals:** Get necessary regulatory approvals from the Securities and Exchange Commission (SEC), Federal Inland Revenue Service (FIRS), and the National Identity Management Commission (NIMC). These approvals are essential for operating as a microfinance bank in Nigeria. 8. **Open an account with the CBN:** As a licensed MFB, you should open a settlement account with the Central Bank of Nigeria. This account serves as your institution's main account where it will deposit and withdraw funds related to financial transactions. 9. **Begin operations:** Finally, after obtaining all necessary licenses and regulatory approvals, you can begin operating your microfinance bank in Nigeria. Make sure that you follow all the guidelines provided by the CBN for licensing of MFBs. It is essential to note that these steps represent a brief summary of the process. Starting a microfinance bank involves significant time, effort, and resources. It's crucial to approach this endeavor with dedication and commitment to success.