Apex bank warns non-interest institutions against governance failures, compliance lapses and fintech vulnerabilities threatening investor confidence……
The Central Bank of Nigeria has sounded a strong warning to non-interest financial institutions operating in the country, cautioning that poor governance standards and compliance failures could threaten confidence in Nigeria’s fast-growing Islamic finance industry.
The warning was issued during the second Annual Interactive Session between the CBN’s Financial Regulation Advisory Council of Experts (FRACE) and Advisory Committees of Experts (ACEs) of non-interest financial institutions held in Abuja.
Representing the Deputy Governor for Financial System Stability, Philip Ikeazor said the rapid expansion of Islamic finance in Nigeria has exposed the sector to increasing operational, regulatory and technological risks that must be addressed before they escalate into larger systemic problems.
According to him, the sector’s growing size and sophistication have created vulnerabilities tied to governance weaknesses, Shariah compliance issues, operational failures and emerging digital finance risks.
He warned that failure to properly manage these threats could weaken public trust, destabilise parts of the financial system and damage the credibility of Nigeria’s non-interest banking ecosystem.
The apex bank said the engagement forms part of ongoing efforts to strengthen regulatory oversight, improve Shariah governance and reinforce risk management standards across the industry.
Over the past decade, non-interest financial institutions have gained momentum in Nigeria by offering ethical and Shariah-compliant financial alternatives while supporting financial inclusion, MSME growth and real sector financing.
The CBN noted that the establishment of FRACE, alongside mandatory Advisory Committees of Experts within non-interest institutions, was aimed at creating a unified governance framework capable of ensuring industry-wide compliance and accountability.
Officials at the event stressed that regular collaboration between regulators and advisory committees remains critical as the sector evolves, especially with the emergence of Islamic fintech platforms and increasingly complex financial products.
Speaking at the session, Rita Sike said innovation within the industry has made stronger supervision more necessary than ever.
She explained that the increasing diversity of products, institutions and technology-driven channels requires continuous engagement between regulators, scholars and financial practitioners to keep the sector stable and credible.
Also speaking, Bashir Umar described the interactive session as an important step toward strengthening governance standards and deepening collaboration between the CBN and operators in the non-interest finance space.
He commended the apex bank for reviving the engagement platform, which was first introduced in 2014.
The event featured discussions on Shariah non-compliance risks, governance structures and the role of Islamic fintech in expanding financial inclusion across Nigeria.
Participants included senior CBN officials, managing directors of non-interest banks, members of FRACE and ACEs, alongside representatives from the Bank of Industry and the Securities and Exchange Commission.
The latest warning comes amid growing interest in Nigeria’s Islamic finance market, with industry experts recently calling for larger and more frequent Sukuk issuances to unlock infrastructure funding and attract ethical investors seeking safer asset-backed instruments.
