Highlights of the New BOFIA, 2020

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Highlights of the new BOFIA, 2020; BOFIA 2020; Lumenar
CBN Governor: Godwin Emefiele




On the 12th of November, 2020, President Mohammed Buhari signed the Banks and other Financial Institutions Act (BOFIA) of 2020 into law. This act repealed the BOFIA Act of 1991.


So what are the highlights of BOFIA 2020?

a. Requirements to carry on banking business in Nigeria:

Under the current legal dispensation, you need to incorporate a company under the Companies and Allied Matters Act, 2020. Secondly, you have to obtain a valid banking license from the CBN. See sec 2 of the BOFIA Act, 2020.

b How do you apply for grant of licence?

This is provided for under sec 3 of the BOFIA Act, 2020.
-Apply in writing to the Governor
-Attach a feasibility report for the proposed bank including financial projections for at least five years.
-Attach a draft copy of the Memorandum and Articles of Association of the proposed bank.
-Attach a list of the shareholders, directors and Principal officers of the proposed bank and their particulars.
-Attach evidence of payment of the prescribed application fees
– deposit of a sum equal to the minimum paid -up share capital in CBN
– other information required by CBN.

The new Act provides that bank officials are personally liable for any failures to seek compliance with their conditions of licence.

c. Is grant of banking license by CBN automatic?

No. It is discretionary. However, the CBN Governor must give you reasons for it’s refusal. Sec 3(3) of the new BOFIA Act.


d. What happens when license is not granted?

This is provided for in sec 4(2)(a). Where license is not granted, the CBN is to refund the sum deposited to the applicant alongside the investment income less tax and administrative expenses.

e. Where license is granted?

The deposit will be repayed by CBN to the licensed institution together with the investment income.


f. When do I need the consent of CBN?

CBN is the Apex regulatory body for banks in Nigeria. You need the consent of CBN when
– You want to open another branch office sec 6 of BOFIA ACT, 2020
-You want to close a branch office.
-You want to restructure, merge, sell or transfer any part of the bank in question. Sec 7 of BOFIA ACT OF 2020
– when you want to carry on the business of fintech or digital financial service delivery. Sec 58.

g. Can a foreign banks carry on the business of banking in Nigeria?

They can only when they have obtained prior approval from the CBN. Sec 8(1).

The Act also creates a credit tribunal under sec 102 of BOFIA ACT, 2020. This is aimed at improving the loan recovery system in Nigeria as well as to protect Nigerian banks from bad debts. The Act also recognised the emerging growth of fintech in Nigeria. Hence, sec 69 of BOFIA, 2020 provides for the application and granting of license for fintechs.

The new BOFIA, 2020 has been criticised for including immunity clauses in favour of CBN as well as for it’s excessive grant of discretionary powers to the CBN and it’s Governor.

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