BANKS AND OTHER FINANCIAL INSTITUTIONS DECREE 25 1991 ACT CAP. B 3 L.F.N. 2004
Commencement [20th June 1991]
An Act to regulate banking and other financial institutions and for matters connected therewith
Part 1 - Banks
Establishment of Banks, Etc.
1. (1) The Central Bank of Nigeria (hereinafter in this Act referred to as " the Bank") shall have all the functions and powers conferred and the duties imposed on it under this Act subject to the overall supervision of the Minister.
(2) The Bank shall, in addition to the functions and powers conferred on it by this Act, have the functions and powers conferred and the duties imposed on the Bank by the Central Bank of Nigeria Decree 1991.
(3) The Bank may authorise or instruct any officer or employee of the Bank to perform any of the functions, exercise any powers, or discharge any of its duties under this Act
(4) The Bank may, either generally or in any particular case, appoint any person who is not an officer or employee of the Bank, to render such assistance as it may specify in the exercise of its powers, the performance of its functions, or the discharge of its duties under this Act, or to exercise, perform or discharge the functions and duties on behalf and in the name of the Bank.
(5) For the purposes of this Act, a person shall be deemed to be receiving money as deposits -
(a) if the person accepts deposit from the general public as a feature of its business or if it issues an advertisement or solicits for such deposit;
(b) notwithstanding that it receives moneys and deposits which are limited to fixed amounts or that certificates or other instruments are issued in respect of any such amounts providing for the repayment to the holder thereof either conditionally or unconditionally of the amount of the deposits at specified or unspecified dates or for the payment of interest or dividend on the amounts deposited at specified intervals or otherwise, or that such certificates are transferable.
(6) Notwithstanding anything contained in this section to the contrary, the receiving of moneys against any issue of shares and debentures offered to the public in accordance with any enactment in force within the Federation shall not be deemed to constitute receiving moneys as deposits for the purposes of this Act
2. (1) No person shall carry on any banking business in Nigeria except it is a company duly incorporated in Nigeria and holds a valid banking licence issued under this Act
(2) Any person who transacts banking business without a valid licence under this Act is guilty of an offence and liable on conviction to a term of imprisonment not exceeding 10 years or a fine exceeding N2,000,000 or to both such imprisonment and fine.
Application for grant of licence
3. (1) Any person desiring to undertake banking business in Nigeria shall apply in writing to the Governor for the grant of a licence and shall accompany the application with the following-
(a) feasibility report of the proposed bank;
(b) a draft copy of the memorandum and articles of association of the proposed bank;
(c) a list of the shareholders, directors and principal officers of the proposed bank and their particulars;
(d) the prescribed application fee; and
(e) such other information, documents and reports as the Bank may, from time to time, specify.
(2) After the applicant has provided all such information, documents and report as the Bank may require under subsection (1) of this section, the shareholders of the proposed bank shall deposit with the Bank a sum equal to the minimum paid-up share capital that may be applicable under section 9 of this Act
the payment of the sum referred to in subsection (2) of this section, the
Governor may issue a licence
 Deleted by BANKS AND OTHER FINANCIAL INSTITUTIONS (AMENDMENT) ACT 2002
(4) Where an application for a licence is granted, the Bank shall give written notice of that fact to the applicant and the licence fee shall be paid.
"(5) An application for a licence shall be forwarded to the Governor and all licenses to be issued shall be with the prior approval of the Minister..
Investment and release of prescribed minimum paid-up share capital.
4. The Bank may invest any amount deposited with it pursuant to section 3(2) of this Act in treasury bills or such other securities until such a time as the Governor shall decide whether or not to grant a licence, and where the licence is not granted the Bank shall repay the sum deposited to the applicant, together with the investment income after deducting administrative expenses and tax on the income.
Power to revoke or vary conditions of licence
5. (1) The Bank may vary or revoke any condition subject to which a licence was granted or may impose fresh or additional conditions to the grant of a licence.
(2) Where the grant of a licence is subject to conditions, the bank shall comply with those conditions to the satisfaction of the Bank within such period as the Bank may deem appropriate in the circumstances.
(3) Any bank which fails to comply with any of the conditions of its licence is guilty of an offence and liable on conviction to a fine not exceeding 50,000 for each day during which the condition is not complied with.".
(4) Where the Governor proposes to vary, revoke or impose fresh or additional conditions on a licence, he shall, before exercising such power, give notice of his intention to the bank concerned and give the bank an opportunity to make a representation to him thereon.
(5) Any bank which fails to comply with any fresh or additional condition imposed in relation to its licence is guilty of an offence and liable on conviction to a fine not exceeding N500,000 and to an additional fine of N5,000 for each day during which the offence continues.
Opening and closing of branches
6. -(1) No bank may open or close any branch office anywhere within or outside Nigeria except with the prior consenting writing of the Bank.
(2) Any bank which contravenes the provisions of subsection (1) of this section is guilty of an offence and liable to a fine not exceeding N2,000,000 and
the closure in case of the opening of a branch office and the re‑opening in the case of a closure of a branch office and in addition to a fine of N100,000 for each day during which the offence continues.
Restructuring, reorganisation, mergers etc.
7.-(1) Except with the prior consent of the Governor, no bank shall enter into an agreement or arrangement-
(a) which results in a change in the control of the bank;
(b) for the sale, disposal or transfer howsoever of the whole or any part of the business of the bank;
(c) for the amalgamation or merger of the bank with any other person;
(d) for the reconstruction of the bank;
(e) to employ a management agent or to transfer its business to any such agent.
(2) Any bank which contravenes the provisions of subsection (1) of this section is guilty of an offence and liable to a fine not exceeding N1,000,000 and in the case of a continuing offence to an additional fine of N10,000 for each day during which the offence continues
Operation of foreign banks in Nigeria
8. (1) Except with the prior approval of the Bank, no foreign bank shall operate branch offices or representative offices in Nigeria.
(2) The Bank may, subject to such conditions as it may impose, from time to time, grant to any bank registered in Nigeria or a foreign bank a licence to undertake off‑ shore banking business from Nigeria.
(3) Subject to the provisions of subsection (1) of this section, nothing in the provisions of the Nigerian Investment Promotion Commission Act or any other law or enactment shall be construed as authorising any person whether as a citizen of Nigeria or a non‑Nigerian to carry on any banking business in Nigeria without a valid banking licence issued by the Bank under this Act
(4) Any person who contravenes the provisions of subsection (1) or (3) of this section is guilty of an offence and liable on conviction to a fine not exceeding
N 1,000,000 and in the case of a continuing offence to an additional fine of N10,000 for each day during which the offence continues
Minimum paid-up share capital of banks and compliance with minimum paid-up share capital requirement
9.‑(1) The Bank shall, from time to time, determine the minimum paid‑up share capital requirement of each category of banks licensed under this Act
(2) Any failure to comply with the provisions of this section of this Act within such period as may be determined by the Bank, from time to time, shall be a ground for the revocation of any licence issued pursuant to the provisions of this Act or any other Act repealed by it.".
Share holders voting rights to be proportional to shareholding CAP C20
10. Notwithstanding the provisions of the Companies and Allied Matters Act or any agreement or contract, the voting rights of every shareholder in a bank shall be proportional to his contribution to the paid-up share capital of the bank.
Restriction of legal proceedings in respect of shares held in the name of another
11. Notwithstanding anything contained in any law or in any contract or instrument, no suit or other proceeding shall be maintained against any person registered as the holder of a share in a bank on the ground that the title to the said share vests in any person other than the registered holder:
Provided that nothing in this section shall bar a suit or other proceeding on behalf of a minor or person suffering from any mental illness on the ground that the registered holder holds the share on behalf of the minor or person suffering from the mental illness.
Revocation of licence
12(1)The Governor may, with the approval of the Board of Directors and by notice published in the Gazette, revoke any license granted under this Act if a bank
(a) ceases to carry on in Nigeria the type of banking business for which the licence was issued for any continuous, period of 6 months or any period aggregating 6 months during a continuous period of 12 months.
(b) goes into liquidation or is wound up or otherwise dissolved;
(c) fails to fulfil or comply with any condition in subject to which the licence was granted;
(d) has insufficient assets to meet its liabilities;
1991 No. 24 1997
No. 3.1998 No. 37. Cap. C4
(e) fails to comply with any obligation imposed upon it by or under this Act or the Central Bank of Nigeria Act, as amended.'
Minimum capital ratio
13. (1) A bank shall maintain; at all times, capital funds unimpaired by losses, in such ratio to all or any assets or to all or any liabilities or to both such assets and liabilities of the bank and all its offices in and outside Nigeria as may be specified by the Bank.
(2) Any bank which fails to observe any such specified ratios may be prohibited by the Bank from-
(a) advertising for or accepting new deposits;
(b) granting credit and making investment;
(c) paying cash dividend to shareholders;
(3) In addition, the bank may be required to draw up within a specified time a capital reconstitution plan acceptable to the Bank.
Non-compliance with capital ratio requirement
14. (1) Failure to comply with the provisions of section 13 of this Act may constitute a ground for the revocation of the licence of the bank under this Act
(2) Where the Bank proposes to revoke the licence of any bank pursuant to subsection (1) of this section, the Bank shall give notice of its intention to the bank and the bank may within 30 days make representation (if any) to the Bank in respect thereof.';
Minimum holding of Cash reserves, specified liquid assets, special deposits and stabilisation securities Cap. C4
15. (1) Every bank shall maintain with the Bank cash reserves, and special deposits and hold specified liquid assets or stabilisation securities, as the case may be, not less in amount than as may, from time to time, be prescribed by the Bank by virtue of section 39 of the Central Bank of Nigeria Act.
(2) Where both assets and liabilities are due from and to other banks, they shall be offset accordingly, and any surplus of assets or liabilities shall be included or deducted, as the case may be, in computing specified liquid assets.
(3) In the case of the long-term advances to a bank or by an overseas branch or office of a bank, the advances may, with the approval of the Bank, be excluded from the demand liabilities of the bank.
(4) Every bank shall -
(a) furnish within a reasonable time any information required by the Bank to satisfy the Bank that the bank is observing the requirements of subsection (1) of this section;
(b) not allow its holding of cash reserves, specified liquid assets, special deposits and stabilisation securities to be less than the amount which may, from time to time, be prescribed by the Bank;
(c) not during the period of any deficiency grant or permit increases in advances, loans or credit facilities to any person without the prior approval in writing of the Bank.
(5) Any bank which fails to comply with any of the provisions of subsection (4) of this section is guilty of an offence and liable