COMMUNITY BANKS ACT

What Is This Policy?

This Act provides the legal framework for the establishment, licensing, and regulation of community banks in Nigeria as grassroots financial institutions serving rural and underserved communities. Banks and Other Financial Institutions Act (BOFIA); Central Bank of Nigeria Act; Companies and Allied Matters Act; Microfinance Policy, Regulatory and Supervisory Framework (CBN)

Rural communities with limited access to formal banking services Smallholder farmers, artisans, and petty traders seeking small loans and savings products Community-based organisations and cooperatives seeking to establish a community bank

Who Does It Target?

Rural communities and low-income populations in underserved areas without access to commercial banks. Community bank operators, managers, and their depositors. The Central Bank of Nigeria as the regulatory authority. Cooperatives, market associations, and small business owners in rural areas.

What Does It Aim to Achieve?

To extend basic banking and credit services to rural and semi-urban communities that are not served by conventional commercial banks, by establishing small, community-owned financial institutions that understand local economic conditions.

Key Features

Community Bank Licensing: Establishes a licensing framework for community banks distinct from commercial and merchant banks Limited Operations: Restricts community banks to basic deposit taking, savings, and small loan products appropriate to their community focus Community Ownership: Requires that community banks be substantially owned by members of the community they serve Supervision: Places community banks under the supervisory authority of the Central Bank of Nigeria Simplified Requirements: Sets lower minimum capital, staffing, and infrastructure requirements than those applicable to commercial banks

Current Status

Rollout Stage: Largely absorbed into the microfinance banking framework under the CBN Microfinance Policy Coverage: Nationwide; legacy community bank operations continuing under microfinance licences Funding: Community share capital, deposits, and CBN development finance interventions

How to Access

Persons seeking to establish a community bank must apply to the Central Bank of Nigeria for the appropriate licence. Minimum paid-up capital as prescribed by the CBN Application for licensing submitted to the CBN with the required documentation Approval of proposed directors and management by the CBN Compliance with the CBN's Microfinance Policy guidelines Application method: Central Bank of Nigeria, Development Finance Department, Abuja

Official Resources

Website: www.cbn.gov.ng

Legal Framework

Banks and Other Financial Institutions Act (BOFIA); Central Bank of Nigeria Act; Companies and Allied Matters Act; Microfinance Policy, Regulatory and Supervisory Framework (CBN)