COMMUNITY BANK ACT (1992)
Act · Finance
Policy date: 2005-01-01
An Act that establishes community banks to provide basic financial services to rural and underserved areas in Nigeria. It targets rural communities, bank promoters, and the Central Bank of Nigeria as regulator. This extends banking access to unbanked populations.
COMMUNITY BANK ACT (1992)
What Is This Policy?
An Act that established community banks as a category of financial institution providing basic banking services to rural and underserved communities, subsequently replaced by the microfinance banking framework.
Who Does It Target?
Rural communities lacking access to formal banking Community bank promoters and investors CBN as the regulatory authority State and local government housing community bank expansion
What Does It Aim to Achieve?
Extend basic financial services to unbanked rural communities through community-owned and operated financial institutions before the microfinance framework was introduced.
Key Features
Community Focus: Community banks served specific communities, typically at the local government level. Community Ownership: Required significant local shareholding ensuring community ownership of the institution. Basic Services: Provided savings, loans, and payments services to community members. CBN Supervision: Community banks were supervised by the CBN under a simplified regulatory framework.
Current Status
Rollout Stage: Superseded - replaced by microfinance bank framework from 2005 Coverage: Historical rural banking framework Beneficiaries: Historical - rural communities received basic banking services Funding: Community shareholding; deposits
How to Access
Community banks have been converted to microfinance banks or wound down Access microfinance banking services through licensed MFBs Application method: Engage licensed Microfinance Banks for similar services to what community banks provided.
Important Terms
Community Bank Act is effectively superseded by the CBN Microfinance Policy 2005 Former community banks were either converted to MFBs or liquidated The Microfinance Bank framework provides a more robust regulatory structure
Official Resources
Website: https://www.cbn.gov.ng Contact: Central Bank of Nigeria (CBN)
Legal Framework
The Community Bank Act 1992 operated under the Central Bank of Nigeria Act and the Banks and Other Financial Institutions Act (1991 version). It was superseded by the Microfinance Policy Framework 2005 and subsequently the Microfinance (Supervision and Regulation) Framework. The CBN Act 2007 and BOFIA 2020 now govern the successor microfinance banking sector that replaced community banking in Nigeria.