The Central Bank of Nigeria (CBN) has unveiled a draft regulatory framework aimed at strengthening oversight of banks, fintech companies and other closely linked financial institutions by creating clear operational and financial boundaries to prevent risks from spreading across affiliated entities.
The proposals are contained in the apex bank’s newly released Exposure Draft Guidelines on Ring-Fencing Operations of Closely Linked Entities in the Nigerian Financial System.
According to the CBN, the proposed framework seeks to address growing concerns arising from the increasing integration of banking, payments, lending, wealth management and other financial services businesses operating under common ownership structures.
The regulator said the guidelines are designed to establish clear operational and functional boundaries among affiliated institutions and curb regulatory arbitrage resulting from the blending of activities across different licence categories.
The exposure draft, signed by the Director of the Financial Policy and Regulation Department, Dr. Rita Sike, stated that the initiative forms part of the CBN’s efforts to promote a safe, sound and stable financial system, safeguard consumers and strengthen regulatory oversight.
Under the proposed rules, closely linked entities would be required to maintain stronger governance structures, operational independence and financial discipline.
The framework outlines requirements covering governance arrangements, intra-group transactions, segregation of customer funds and data, operational autonomy, recovery and resolution planning, and consolidated supervision.
According to the apex bank, the measures are intended to improve transparency and accountability, strengthen consumer protection, reduce contagion risks among affiliated institutions and preserve financial stability while encouraging innovation and fair competition in the financial sector.
One of the key proposals is a limit on board overlaps among affiliated institutions. The CBN plans to cap the number of directors serving simultaneously on the boards of closely linked entities at 20 per cent of the total board membership of an institution.
The regulator is also proposing stricter restrictions on personnel sharing within financial groups. Except where permitted under existing Shared Services Guidelines, employees would not be allowed to hold concurrent positions in affiliated entities.
The draft further seeks to ensure operational independence, particularly in the area of technology infrastructure.
Under the proposed framework, each institution would be required to maintain independent critical functions and would be prohibited from using technology platforms to offer services outside the scope of its licence, even if affiliated entities are authorised to provide such services.
The CBN also plans to prohibit institutions from facilitating customer transactions on behalf of affiliated companies through their technology platforms.
In addition, the apex bank reserved the right to require the physical separation of data centres where necessary to reduce operational contagion risks and ensure that each entity can function independently.
The draft guidelines introduce tighter controls on intra-group funding arrangements, requiring every regulated institution to meet capital adequacy and liquidity requirements independently, regardless of the financial strength of other entities within the same group.
The CBN also proposed that any form of intra-group liquidity support would require prior written approval from the regulator.
To strengthen consumer protection, the framework mandates that customers must provide explicit consent before being transferred or onboarded to services offered by affiliated institutions.
Financial institutions would also be required to provide clear disclosures explaining the nature of the service being offered and the identity of the institution providing it, while informing customers of alternative options where applicable.
Another major provision requires closely linked entities to develop comprehensive recovery and resolution plans.
The CBN said each institution must maintain a strategy detailing how it would restore financial viability during periods of severe stress and, where necessary, wind down operations in an orderly manner without causing disruption to the wider financial system.
The apex bank has invited stakeholders to review the draft guidelines and submit comments before July 9, 2026, after which the framework will be finalised.
The proposed regulations represent one of the most significant efforts by the CBN in recent years to strengthen risk management, enhance consumer confidence and safeguard the stability of Nigeria’s rapidly evolving financial services sector.
