A Money Lending License in Nigeria can be used for consumer and commercial lending in Nigeria. The Money Lending Law of the different states regulates and provides for the procedure for money lending license in Nigeria.
The money lending license can be obtained in each 36 states of Nigeria and the Federal Capital Territory (FCT).
For an individual or maybe organization to be a reputable moneylender, the person or perhaps organization must obtain the Money Lender License to perform such work in Nigeria.
Section four of the Money Lenders Law Chapter 7 Laws of Lagos State provides "that an individual that lends money at interest or even who lends a sum of cash in consideration of a bigger sum being repaid shall be presumed to be a cash lender until contrary is actually proven".
Only persons and companies licensed to be moneylenders by the pertinent government authority are actually permitted and recognized as moneylenders.
Among the positive aspects of becoming a licensed moneylender is the fact that a moneylender is able to exercise the right of its in instituting an action in court to recover the principal mortgage and accrued interest from a defaulting borrower.
Requirements for Money Lending License by a Company
- A cover letter with the company seal affixed to it
- Evidence of maintaining an office by the company.
- Certified True Copy of all Incorporation Documents
- Certificate of Incorporation of the Company
- Tax Clearance Certificate for applicant; in case it's a newly registered business, then a proof that the business is actually a registered taxpayer.
- Three-year tax clearance for not less than two directors of the company
- Police Clearance Certificate for two directors of the company
- Reference Letter from a business bank
- Logo or Symbol of the Company
- Evidence of payment of renewal fee.
Procedure and steps for using for a cash Lending License
An application will be made in the prescribed form to the Chief Magistrate within the magisterial jurisdiction where the business will be carried on with the applicant's letterhead Such application shall be supported with the requisite documents.
Upon the application to the Chief Magistrate, the applicant will be given Forms C and B.
After acquiring the required court documents, the applicant shall make a formal application to the Ministry of Home Affairs and Tourism with the pertinent documents.
The Applicant shall make a payment of the official fee into the Lagos State Government Account.
The last stage includes physical assessment and the visitation of the planned office by government officials.
Upon visitation, in case the organization in question is already operating in the cash lending, the books will be inspected in addition to the workplace.
The official will also inspect the signage of the company.
In case the business complies with the statutory requirements and upon the government officials' satisfaction, the applicant will be given with the Money Lending License.
Renewal of Money Lending License
Money lending licenses issued by states have one-year duration. The license must be renewed annually.
The requirements for the renewal of money lenders license include the followings:
- Application for renewal
- Moneylenders ordinance (form B) from Magistrate Court
- Duly completed as well as endorse (form C) from Chief Magistrate court
- The previous license issued
- Updated tax clearance
- Evidence of payment of renewal fee.
- inspection and Re-visitation.
Important Facts About Money Lending Operation & Licensing in Nigeria
- The Central Bank of Nigeria (CBN) License is not required to engage in money lending in Nigeria.
- A money lender company can engage in consumer and commercial lending in Nigeria
- The CBN Finance Company License can also be used in lieu of Money Lending License to engage in consumer lending.
- The money lending license are issued by various states in Nigeria.
- Some states (especially Ogun State of Nigeria) requires such company incorporation documents must reflect that the company office is located within their states.
- A Money lending license lasts between January to December, and as such it must be renewed annually.
- A license money lender cannot receive deposits or savings from member of public. Any company wishing to receive deposits should opt for a Microfinance Bank License issued by CBN.
- A money lending company is not restricted by any law from carrying out its activities via online.
- A money lending company obtain license in all states it intends to open physical office.
- A foreign company wishing to participate in money lending in any state in Nigeria must register a separate entity in Nigeria, because only company duly registered in Nigeria can participate in any business in Nigeria in line with the Companies and Allied Matters Act, LFN 2004.
To conclude, it's essential for every organization that plans to carry on a money lending services to get the appropriate license, so as to legitimize the company and also to be entitled to an absolute legal remedy.
Last but not least, a standard Financial Technology (FINTECH) startup business seeking to participate in money lending business through mobile technology may also obtain a money lending license from each and every state the company intends to hold out its company.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.