The Central Bank of Nigeria has issued a strong warning to Nigerians about an unauthorized financial institution operating in four key states across the country. The apex bank has declared Zuldal Microfinance Bank illegal for conducting banking operations without proper licensing and authorization.
CBN Exposes Illegal Operations
In an official statement released on Wednesday, the CBN through its Acting Director of Corporate Communications, Mrs Hakama Sidi Ali, revealed that Zuldal Microfinance Bank has been operating branches in Lagos, Kaduna, Kano, and Abuja without the required license from the central bank. The institution has been providing microfinance services to unsuspecting customers despite lacking legal authorization.
The Central Bank emphasized that Zuldal Microfinance Bank Limited is not licensed and has no authorization to operate any form of banking or microfinance business in Nigeria. This declaration comes as part of the CBN's ongoing efforts to protect consumers from fraudulent financial operations.
Legal Violations and Public Warning
The CBN explained that Zuldal's operations directly contravene section 2(1) of the Banks and Other Financial Institutions Act (BOFIA) 2020, which mandates that all entities offering banking services must be properly incorporated and licensed by the Central Bank of Nigeria.
The apex bank issued a clear warning that any dealings with Zuldal Microfinance Bank would be at the customer's own risk. The CBN advised the public to disregard any claims by Zuldal officials about being licensed and to exercise caution when choosing financial service providers.
How to Verify Legitimate Financial Institutions
To protect themselves from illegal operators, the CBN urged Nigerians to always verify the licensing status of financial institutions before conducting business with them. The public can consult the official CBN website at cbn.gov.ng for a comprehensive list of licensed banks and microfinance institutions operating legally in Nigeria.
This warning comes against the backdrop of significant challenges in the microfinance sector. Recent data from the CBN shows that over 95% of loans were obtained from microfinance banks in 2024, highlighting the crucial role these institutions play in serving low-income individuals and small businesses.
The situation also reflects ongoing regulatory challenges. In 2023, the CBN revoked the licenses of over 170 microfinance banks due to various issues including insolvency, inactivity, and failure to render returns. Former CBN governor Godwin Emefiele had explained that many of these institutions had not conducted business for six months, violating their license conditions.
Financial experts predict that the trend of microfinance bank closures may continue due to the growing popularity of technology-based banking and the proliferation of digital lending applications. However, the CBN remains committed to maintaining financial system stability and protecting consumers from illegal operators.
