CBN Proposes Stricter Oversight Framework for Banks, Fintechs and Financial Groups

The Central Bank of Nigeria (CBN) has unveiled a new regulatory framework aimed at strengthening oversight of banks, fintechs and other closely linked financial institutions operating within the country’s financial system.

The proposed framework, contained in the Exposure Draft Guidelines on Ring-Fencing Operations of Closely Linked Entities in the Nigerian Financial System, seeks to establish clear operational, governance and financial boundaries among affiliated institutions to prevent risks in one entity from affecting others within the same group.

According to the CBN, the initiative is designed to promote financial stability, enhance consumer protection, strengthen regulatory oversight and curb regulatory arbitrage arising from the overlap of activities across different licence categories.

The draft guidelines, signed by the Director of the Financial Policy and Regulation Department, Dr. Rita Sike, outline requirements covering governance structures, intra-group transactions, operational independence, segregation of customer funds and data, recovery and resolution planning, as well as consolidated supervision.

Under the proposal, only a limited number of directors would be permitted to serve simultaneously on the boards of affiliated institutions, with such appointments capped at 20 per cent of the total board membership of an entity.

The CBN is also proposing restrictions on staff sharing among related entities. Except where permitted under existing Shared Services Guidelines, employees would not be allowed to hold concurrent positions across affiliated institutions.

To strengthen operational independence, the regulator is seeking to ensure that each institution maintains separate critical functions and does not use technology platforms to provide services outside its approved licence category.

The draft further prohibits institutions from facilitating customer transactions on behalf of affiliated entities through their technology platforms and reserves the right to require separate data centres where necessary to reduce operational and contagion risks.

On financial arrangements, the CBN proposes that each regulated entity must independently meet capital adequacy and liquidity requirements, regardless of resources available within the wider group. Any intra-group liquidity support would also require prior written approval from the apex bank.

The framework places significant emphasis on consumer protection. It requires institutions to obtain explicit customer consent before onboarding customers onto services provided by affiliated entities and mandates clear disclosures to ensure customers understand which institution is providing a particular service.

In addition, closely linked entities would be required to develop recovery and resolution plans detailing how they would restore financial stability during periods of severe stress or, where necessary, wind down operations in an orderly manner without disrupting the broader financial system.

The CBN said the measures are intended to improve transparency, accountability and resilience across Nigeria’s financial services sector while supporting innovation and fair competition.

Stakeholders have until July 9, 2026, to submit comments on the exposure draft before the guidelines are finalised.