CBN revokes 47 microfinance bank licences as Sycamore cites legacy issues

The Central Bank of Nigeria (CBN) has revoked the operating licence of Sycamore Microfinance Bank, but the fintech says the decision relates to legacy issues tied to the Kano-based tier-2 MFB whose licence it acquired as part of its expansion into banking.

Sycamore appeared on the CBN’s list of 46 microfinance banks whose licences were revoked on Wednesday. The company said the regulatory action affects the acquired entity and stems from historical compliance issues that predate the acquisition rather than its current operations.

The revocation means Sycamore’s planned expansion beyond digital lending into regulated banking services now faces fresh uncertainty. It comes barely two months after the lender told TechCabal it planned to build a deposit base exceeding ₦40 billion ($29.13 million) in 2026.

“Sycamore had acquired the entity as part of its planned expansion into deposit-taking and payments,” the company said in a statement shared with TechCabal on Wednesday. “The company was in the process of establishing its integration into its group and operational infrastructure for the entity when the licence was captured in the CBN’s sector-wide compliance review.”

The company added that its existing businesses remain fully operational. Its consumer lending platform continues to operate under the Federal Competition and Consumer Protection Commission (FCCPC)’s approval, while Sycamore Investment and Asset Management Limited (SIAML) remains licenced by the Securities and Exchange Commission (SEC).

“All customer funds and investments are secure and fully accessible. The company will provide further updates as things progress,” the company said.

Like several Nigerian fintechs, Sycamore entered banking by acquiring an existing microfinance bank rather than applying for a fresh licence. The strategy allows fintechs to gain access to deposit-taking capabilities, payments infrastructure, and lower-cost funding while avoiding the lengthy licensing process.

The CBN did not single out Sycamore in its Wednesday announcement. It has revoked the operating licences of 47 microfinance banks in the last two days. According to the regulator, the affected institutions failed to meet the conditions required to continue operating as licenced financial institutions. 

The latest action affects a mix of Tier 1, Tier 2, and state microfinance banks spread across more than a dozen states, including Lagos, Kano, Abuja, Ogun, Kaduna, and Rivers. Among the affected institutions are NowNow Digital MFB, Creditville MFB, Safegate MFB, Sycamore MFB, Gold MFB, and Entrepreneur MFB.

The central bank said the revocations were triggered by one or more breaches, including “insufficient assets to meet liabilities, closure of operations without the approval of the CBN, inactivity and cessation of financial intermediation, failure to commence operations within 12 months of licence approval, and failure to maintain minimum capital funds unimpaired by losses.”

National MFBs must maintain a minimum paid-up capital of ₦5 billion ($3.62 million); state MFBs require ₦1 billion ($724,150); tier 1s require ₦200 million ($145,729); and tier 2s need ₦100 million ($72,865). 

Goldman Microfinance Bank’s case was more severe. The bank had already entered liquidation and voluntarily applied to be wound up. The CBN also said the lender was critically undercapitalised, lacked enough assets to meet its liabilities, and breached provisions of the Banks and Other Financial Institutions Act (BOFIA), 2020.

The revocation of Goldman’s licence took effect on May 21, while the other 46 revocations became effective on July 1.

The sweeping enforcement action comes as the regulator tightens oversight of Nigeria’s banking industry following the completion of commercial banks’ recapitalisation exercise earlier this year. It also underscores that the CBN’s scrutiny extends beyond commercial lenders to microfinance institutions that no longer satisfy licensing requirements.

The clean-up could also reshape how fintechs acquire MFBs going forward. As dormant and non-compliant microfinance banks disappear from the market, acquisition targets are likely to become scarcer, raising the premium on compliant institutions while reinforcing the CBN’s willingness to scrutinise licences even after ownership changes.

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