Apex bank warns non-interest financial institutions against compliance failures and operational weaknesses that could threaten public confidence and financial stability……
The Central Bank of Nigeria has expressed fresh concerns over governance and compliance risks within the country’s expanding non-interest finance industry, warning that weak oversight could undermine investor confidence and destabilise the sector.
The warning was issued during the 2nd Annual Interactive Session between the CBN Financial Regulation Advisory Council of Experts and Advisory Committees of Experts of Non-Interest Financial Institutions held at the apex bank’s headquarters in Abuja.
Representing the Deputy Governor for Financial System Stability, Philip Ikeazor, the Director of Financial Policy and Regulation Department, Rita Sike, said the rapid growth of Nigeria’s Islamic finance ecosystem has exposed the industry to increasingly complex operational and regulatory risks.
According to the CBN, the expansion of non-interest banking and Islamic financial services has created new governance challenges that require stronger oversight and more effective risk management systems.
“The industry is growing in size, sophistication and interconnectedness, but it also faces unique risks including non-compliance risk, governance challenges, operational vulnerabilities and emerging technological risks,” the statement said.
The apex bank warned that failure to properly manage these threats could weaken public trust in non-interest financial institutions and affect the credibility of the wider Islamic finance ecosystem.
CBN explained that the engagement session formed part of ongoing efforts to strengthen Shariah governance, improve regulatory clarity and ensure consistent compliance standards across the sector.
The bank noted that non-interest financial institutions have continued to play an increasingly significant role in Nigeria’s financial system by offering ethical and Shariah-compliant alternatives to conventional banking services.
According to the regulator, the sector is also contributing to financial inclusion, real sector financing and support for micro, small and medium-sized enterprises.
The CBN added that the establishment of the Financial Regulation Advisory Council of Experts and the mandatory creation of Advisory Committees of Experts within non-interest institutions were designed to institutionalise a harmonised governance framework across the industry.
The bank stressed that continuous engagement between regulators, scholars and financial institutions remains necessary to ensure that regulatory expectations are clearly understood and properly implemented.
“The objective is to strengthen the institutionalisation and effective operation of a robust Shariah governance system within non-interest financial institutions,” the statement noted.
In his remarks, Deputy Chairman of FRACE, Prof Bashir Umar, said the interactive session was aimed at improving governance standards and promoting stronger collaboration between regulators and industry stakeholders.
He also commended the CBN for reviving the engagement platform, which was initially introduced in 2014.
Speaking earlier, Dr Rita Sike reaffirmed the apex bank’s commitment to building a resilient and well-regulated non-interest finance industry capable of supporting broader economic development goals.
She observed that the increasing diversity of financial products and digital delivery channels, particularly the rise of Islamic fintech solutions has intensified the need for stronger supervision and continuous dialogue within the industry.
“The growing diversity of products, institutions and delivery channels, especially with the emergence of Islamic fintech, underscores the need for sound regulatory oversight and robust advisory input,” she said.
The session featured technical discussions focused on Shariah non-compliance risks within non-interest banking operations as well as the role of Islamic fintech in expanding financial inclusion across Nigeria.
Participants at the event included senior officials of the Central Bank, managing directors of non-interest banks, members of advisory committees, representatives of the Securities and Exchange Commission, the Bank of Industry and other stakeholders within the financial sector.
The latest warning from the CBN comes amid increasing attention on Nigeria’s Islamic finance market, which has witnessed growing investor interest in Sukuk bonds and other asset-backed financing instruments in recent years.
Industry experts have continued to call for deeper reforms, stronger governance standards and larger Sukuk issuances to strengthen the sector’s long-term sustainability and unlock more infrastructure financing opportunities across the country.
