The Central Bank of Nigeria has published 10 conditions that promoters must satisfy before they can own and run a microfinance bank. The requirements sit inside the CBN’s Revised Regulatory and Supervisory Guidelines for Microfinance Banks, and they cover capital, ownership, governance and the approval process from application to opening day.
The framework is worth distinguishing from ordinary commercial banking. These rules apply to microfinance banks specifically, the institutions that typically serve individuals, traders and small businesses excluded from mainstream commercial lending. Anyone considering this route is entering a licensed, closely supervised financial business, not a light-touch fintech venture.
1. Raise the required minimum capital
Capital is the first hurdle, and the amount an investor needs depends entirely on which type of microfinance bank they want to run. The CBN’s guidelines, which took full effect in April 2022, set a ₦200 million minimum for a Tier 1 Unit MFB, the category designed to operate from a single urban location. A Tier 2 Unit MFB, built for rural, unbanked or underbanked areas, needs ₦50 million.
The threshold climbs sharply once an operator wants wider reach. A State MFB requires ₦1 billion, and a National MFB requires ₦5 billion. Those numbers mark a sharp break from the older ₦20 million, ₦100 million and ₦2 billion figures that still circulate in some reports. Investors relying on the outdated thresholds risk badly underestimating how much capital they actually need before they can enter the market.
2. Show evidence that the capital has been paid
The CBN does not accept a promise that investors can raise the money. Applicants must prove the required minimum share capital has actually been paid, and at the Approval-in-Principle stage, that means submitting an RTGS telex copy as evidence of the transfer.
The regulator also scrutinises shareholders and the proposed ownership structure closely. That scrutiny is part of a broader effort to establish who genuinely controls the bank and whether the capital standing behind it holds up.
3. Pay the application fee
Promoters must also pay a non-refundable application fee. The CBN currently sets this at ₦50,000 for Unit MFBs, covering both Tier 1 and Tier 2, ₦100,000 for State MFBs, and ₦250,000 for National MFBs. This fee is separate from the much larger minimum capital requirement and does not count toward it.
4. Prove there is a real business behind the application
A licence application cannot be built around capital alone. The CBN also requires a feasibility report that sets out the proposed bank’s objectives, why it should exist, and what services it intends to offer. For State and National MFBs, the document must go further and lay out planned branch expansion over the first five years.
Staff training, management succession and the institution’s organisational structure need to be addressed as well. In effect, promoters have to show they understand the business they are entering, not just the capital required to enter it.
5. Produce five-year financial projections
The numbers have to work too.
Applicants must submit projections showing expected growth and profitability over a five-year period.
The assumptions behind those forecasts must also be explained.
That requirement allows the regulator to examine whether a proposed bank has a realistic route to profitability or whether its projections depend on assumptions that may be difficult to achieve.
For investors, this is one of the most important stages.
A microfinance licence may provide access to a large underserved market, but poor credit quality, high operating costs and weak risk management can quickly undermine an MFB.
6. Put credible management in place
The CBN also looks closely at the people who will run the institution.The proposed organisational structure must clearly spell out the duties of senior management, while the regulator requires information on directors and key executives.
CVs, academic and work credentials, means of identification and Bank Verification Numbers are among the documents required during the licensing process.The message is straightforward: investors cannot simply provide capital and appoint an inexperienced management team to run a regulated financial institution.
7. Build a credible board
Governance begins before the bank ever opens. Applicants must disclose the proposed composition of their board and submit a CV for each director, including details of any other directorships they hold.
The CBN’s corporate governance framework for MFBs also requires experienced directors on the board, including members with banking or related financial-sector knowledge. That requirement can shape how founders coming from technology, lending or other industries assemble their board. The strongest product or lending platform will not substitute for proper governance.
8. Submit detailed corporate documents
The paperwork goes well beyond a normal company registration.
The proposed MFB must submit its draft Memorandum and Articles of Association, including its registered office, objects, subscribers, share-transfer procedures and arrangements for appointing directors.
The CBN also requires letters of intent from shareholders confirming their proposed investment and letters of consent from prospective board members.
Policies covering credit, internal audit, asset and liability management, accounting, treasury operations, anti-money laundering, risk management, whistleblowing and business ethics are also part of the documentation expected at the licensing stage.
9. Secure Approval-in-Principle before moving to a final licence
The licensing process is not a single approval.
Promoters first have to satisfy the requirements for an Approval-in-Principle.
And an AIP should not be confused with permission to begin operating.
That distinction fits into the broader banking framework established by the CBN, under which institutions must operate under an appropriate banking licence rather than assume that preliminary regulatory approval gives them unrestricted authority to conduct banking business.
10. Meet operational conditions before opening
This is where plans have to become operational. Before granting the final licence, the CBN requires evidence of incorporation, a confirmed head office location, technical infrastructure, operating equipment and an appointed management team.
The proposed institution must also show it can meet technology requirements, including the computers and telecommunications systems needed to run the bank and comply with regulatory obligations. A physical test follows too. The CBN expects acceptable office accommodation and reserves the right to inspect the premises before operations can begin
Why this matters for fintech founders and investors
Nigeria’s microfinance market has moved well past the era when opening a small MFB was mainly a question of raising a modest sum of capital. The regulatory bar now sits much higher. A national operator needs at least ₦5 billion, and even a Tier 1 Unit MFB requires ₦200 million.
Money is only the starting point. Promoters must also build governance structures, risk controls, technology infrastructure, financial projections and management systems capable of satisfying the regulator. That reality matters most for fintech founders who see an MFB licence as a route into deposit-taking, lending or a broader financial-services business. Building a technology platform can happen relatively fast. Meeting the CBN’s full set of conditions rarely does.
