By Patrick C Abuka


The principal enactments that regulate banking in Nigeria are the Central Bank of Nigeria Decree, 1991, the Banking and Other Financial Institutions Decree, 1991, Community Banks Decree, 1992, Federal Mortgage Bank of Nigeria Decree, 1993, the Mortgage Institutions Act, Chapter 231, Laws of the Federation of Nigeria, 1990.

The Banking and Other Financial Institutions Decree provides that no company shall carry on any banking business in Nigeria except it is a company duly incorporated in Nigeria, and holds a valid licence issued under the Decree. A banking licence is issued by the Central Bank if the applicant satisfies the required conditions, and may be revoked if the bank fails to fulfil or comply with the conditions subject to which the licence was granted, or fails to comply with any obligation imposed upon it by or under the Decree, or has insufficient assets to meet its liabilities, or ceases to carry on in Nigeria the type of banking business for which the licence was issued, or goes into liquidation, or is wound up or otherwise dissolved.


The history of banking in Nigeria dates back to the old the British Empire, more than one hundred years ago. The oldest bank was incorporated in 1894 by the colonialists. They also incorporated others about the same time. Solid foundations were laid , upon which the Nigerian banking system has been solidly built. The earliest ones were incorporated in their original British names, such as Barclays Bank and Bank of British West Africa. They continued in these names until as recently as 1972 when, as a result of compulsory acquisition of controlling share interest by Nigerians, their names were changed to Union Bank of Nigeria Limited and First Bank of Nigeria Limited, respectively. In these one hundred years many more banks have been established .


The Central Bank of Nigeria is the apex of all the institutions in the financial system. It has the responsibility for controlling and supervising all commercial banks, merchant banks, finance houses, discount house, community banks, mortgage institutions, people's banks, bureaux de change, all of which are deposit taking institutions. All development banks, although not deposit-taking institutions per se, are regulated by the Central Bank.

By recent amendments to the Central Bank of Nigeria Decree No.24 of 1991, and to the Banks and Other Financial Institutions Decree No.25 of 1991, the Central Bank of Nigeria, has, with effect from January, 1997, been brought under the Federal Ministry of Finance, and reports to the Head of State through the Minister of Finance. However, where there is a serious disagreement on monetary policy between the Ministry of Finance and the Central Bank, the latter would convey such disagreement to the Head of State through the Minister of Finance, and the decision of the Head of State on such matters would be final.

The Nigerian Deposit Insurance Corporation, in exercise of one of its functions to assist monetary authorities in the formulation and implementation of banking policy so as to ensure sound banking practice among banks in the country, may, in certain circumstances, recommend to the Central Bank of Nigeria to revoke the licence of a bank. If no response is given by the Central Bank within thirty days from the date of such recommendation, the Corporation may apply to the Head of State for the revocation of the licence of the bank concerned in addition to putting such bank into liquidation.

This article is intended to provide a general guide to the subject matter and should NOT be treated as legal advice. Specific legal advice should be sought by you about your particular case and special circumstances.

For further information/enquiries, please contact Patrick Abuka on Tel: (234)1-263 4656, 1-263 3024, 1-263 1708, 1-263 3512, 1-263 5115, 1-263 4553 or Fax No: (234) 1-263 1687, 1-263 5189

You may also wish to read through related material on 'Legal Aspects of Investing in Nigeria' provided by Abuka, Ajegbo, Ilogu & Nwaogu. You can view the entire archive via the Internet on Business Monitor Online (, or via your online provider by entering "Abuka, Ajegbo, Ilogu & Nwaogu" and "Business Monitor" as a free text search.