Anyone who carries on the business of Banking without first acquiring the license for it commits an offence, and is liable upon conviction to an Imprisonment term of not less than5 (Five Years) or a fine of not less than N50,000,000 (Fifty Million Naira) only.
INTRODUCTION
Indeed, the goal of every business enterprise is to make a profit for its owners, and Banks are not an exception. A Bank can be defined as a financial institution that is licensed to accept checking and savings deposits and make loans. Banks also provide related services such as individual retirement accounts (IRAs), certificates of deposit (CDs) currency exchange, and safe deposit boxes.
The need to save money, manage expenses and protect our valuables from missing or being stolen has led to our craving for saving ideology like putting money, title document, gold, diamond, necklace and other valuables in banks for safe custody. Hence, the need for a bank in our society is very important, banks have also proven over the years to be the best means of saving not only money but what money can afford. This can be a direct consequence of strict compliance with the regulations as regards the operation and management in the banking sector; as it involves the keeping of monies and other valuables owned by the public.
This article seeks to examine the process of acquiring licenses to effectively operate a bank in Nigeria, the stages required for this purpose, the law regulating banks, and the legal implication on the defaulters.
HOW TO APPLY FOR A LICENSE
The Banks and Other Financial Institutions Act (BOFIA) 2020, is the principal legislation in charge of issuing a license to operate a bank in Nigeria, while the Central Bank of Nigeria (CBN) is the body saddled with the responsibility of giving full effect to the provisions of the BOFIA, which includes the issuing of license to operate a bank in Nigeria[1].
In 2020, the CBN made provision for the Guidelines for licensing and regulation of payment service Banks in Nigeria to regulate the licensing procedure. Therefore, any person desirous of undertaking a bank business in Nigeria must take steps to register as a company and acquire the relevant license.
WHAT IS THE PROCESS OF ACQUIRING LICENSES TO OPERATE A BANK IN NIGERIA; Vis a Vis STAGES
There are three stages for applying for and granting a license for the operation of banks in Nigeria[2].
GRANT OF APPROVAL IN PRINCIPLE
An application for the grant of license is made to the Governor of the Central Bank of Nigeria in writing, by the promoters of the prospective bank. Such application will be accompanied by the following documents:
After the application and submission of the above documents and reports, the shareholders of the proposed bank shall deposit with the CBN, a sum equal to the minimum paid-up share capital that may be applicable under the BOFIA. Upon payment of the sum, the Governor may with the approval of the Board, grant a license with or without conditions or may refuse to grant a license. The Governor need not give reasons for the refusal to grant a license[3]
GRANT OF FINAL LICENSE
Not later than 6 months after the grant of Approval in Principle, the promoters of the proposed bank will apply for the grant of final license with the following documents[4]:
As a requirement to grant the final license, the CBN will inspect the premises and facilities of the proposed bank to:
PRE-COMMENCEMENT OF OPERATION REQUIREMENT
Where the proposed bank has been granted a final license for banking business, it will submit the following documents before the commencement of business informing CBN of its readiness to commence operation:[5]
LEGAL IMPLICATION/ SANCTION
Anyone who carries on the business of Banking without first acquiring the license for it commits an offence and is liable upon conviction to-
CONCLUSION:
It is important to note that the Banks and Other Financial Institutions Act (2020) (BOFIA), is the principal legislation in charge of issuing licenses to operate a Bank in Nigeria, while the Central Bank of Nigeria (CBN) is the body that gives the said license. Therefore, for a bank to legally and effectively operate in Nigeria such a bank must apply for and be duly issued a license.
SNIPPET:
Anyone who carries on the business of Banking without first acquiring the license for it commits an offence, and is liable upon conviction to an Imprisonment term of not less than5 (Five Years) or a fine of not less than N50,000,000 (Fifty Million Naira) only.
KEYWORDS:
Banks, Banks and Other Financial Institutions Act (2020), Nigerian bank, License of Nigerian banks.
AUTHOR: Oyetola Muyiwa Atoyebi, SAN
Mr Oyetola Muyiwa Atoyebi, SAN is the Managing Partner of O. M. Atoyebi, S.A.N & Partners (OMAPLEX Law Firm).
Mr. Atoyebi has expertise in and vast knowledge of Human Right Law Practice and this has seen him advise and represent his vast clientele in a myriad of high-level transactions. He holds the honour of being the youngest lawyer in Nigeria’s history to be conferred with the rank of Senior Advocate of Nigeria.
He can be reached at [email protected]
CONTRIBUTOR: Abdulwasiu Mohammed