Banking & Finance

Banks and Other Financial Institutions Act 2020

Modernised the 1991 BOFIA — strengthens CBN supervisory powers, introduces credit-risk management framework, creates Banking Sector Resolution Fund.

Signed
2020-11-13
Status
In force

1 Background

BOFIA 2020 replaced the original 1991 Act. It expanded CBN supervisory powers, gave the Governor authority to act unilaterally on failing banks, created the Banking Sector Resolution Fund (funded by levies on banks) to pre-finance future bailouts without taxpayer cost, and introduced credit-risk management requirements. It also formalised the regulation of payment service banks (Opay, PalmPay etc.) and non-interest banks.

2 Key provisions (6)

01
CBN may act unilaterally on banks in distress (not requiring board concurrence)
02
Banking Sector Resolution Fund created — pre-funded bailout pool
03
Payment service banks formally regulated
04
Non-interest banks formally regulated
05
Credit-risk management framework codified
06
Bank directors face enhanced fit-and-proper screening

3 What changed in practice

Gave legal cover for the 2024-2026 bank recapitalisation
Payment fintechs (Opay, Kuda, PalmPay) operate under primary legislation
CBN can resolve failing banks faster than under BOFIA 1991

4 Who it affects

BanksFintech / payment service banksBank directorsCBN

5 What it repealed / replaced

Other laws in Banking & Finance