In a significant development, the Central Bank of Nigeria has launched an innovative online platform for the streamlined submission of Microfinance Bank (MFB) license applications. Termed the “CBN Licensing, Approval and Other Requests Portal,” this digital platform marks a pivotal shift from the traditional manual application process previously employed by prospective MFB license applicants when submitting their requests to the CBN.

The revelation of this transformational digital portal came through an official statement, endorsed by the Director of Corporate Communications, Isa AbdulMumin, and is readily accessible on the apex bank’s official website.

The online application system promises an array of advantages, including a simplified application procedure, time-saving efficiencies, improved communication channels, and robust security measures. By embracing digitalization, the Central Bank aims to enhance accessibility, reduce cumbersome paperwork, and expedite license approvals, ultimately benefiting both applicants and the broader economy.

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Effective from September 25, 2023, prospective MFB license applicants are mandated to submit applications via both hardcopy and the online platform (CBN LARP) concurrently. Notably, the cover letter accompanying the hardcopy application must reference a valid application submission via the online portal to be deemed acceptable.

Starting September 25, 2023, aspiring MFB applicants are encouraged to visit www.larp.cbn.gov.ng to initiate the submission of their respective MFB license applications. The CBN LARP provides comprehensive support and guidance for users navigating the new platform, with a downloadable user guide available on the portal for further assistance.

However, it’s essential to note that the Central Bank will continue to accept manual applications for all other license categories until further notice.

Under the CBN’s revised regulations:

• Fintech startups in Nigeria can obtain a singular Payment Solution Services License for ₦250 million. This comprehensive license permits startups to engage in agency banking (Super Agent License), own POS terminals (Payment Terminal Service License), or possess a payment processing portal (Payment Solutions Service License). Alternatively, if a fintech startup lacks the necessary funds (₦250 million) for the comprehensive license, they can opt for any of the three licenses (Super-Agent, PTSS, PSSs) individually.

• Licensed mobile money fintech startups in Nigeria, which can hold customer funds, are treated as banks. Therefore, if a startup wishes to combine a mobile money banking license with other license types, it must establish a “non-operating” holding company. This holding company will manage these additional licenses, including a mobile money license, under a subsidiary framework.

• Startups operating under a holding company structure can simultaneously acquire all license types, provided they maintain the minimum authorized capital requirements for each license and obtain a no-objection letter from the CBN’s Payments System Management Department, established in 2018.

It’s important to note that while the Regulatory Sandbox Category appears promising for startups without substantial funding, the CBN has yet to clarify the specific criteria for licensing fintech startups in this category.

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Notably, fintech startups in Nigeria have predominantly favored microfinance licenses over other categories. However, the new categorization rules are particularly relevant to startups focusing on mobile money services, switching, card processing, and agency banking.

To know more about the procedure for the new license categories, download CBN’s latest application guidance here (.pdf)

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Central Bank of Nigeria Toughens Rules For Fintech Startups Looking For Licenses

Charles Rapulu Udoh

Charles Rapulu Udoh is a Lagos-based lawyer, who has several years of experience working in Africa’s burgeoning tech startup industry. He has closed multi-million dollar deals bordering on venture capital, private equity, intellectual property (trademark, patent or design, etc.), mergers and acquisitions, in countries such as in the Delaware, New York, UK, Singapore, British Virgin Islands, South Africa, Nigeria etc. He’s also a corporate governance and cross-border data privacy and tax expert. 
As an award-winning writer and researcher, he is passionate about telling the African startup story, and is one of the continent’s pioneers in this regard