CBN Deepens Governance Framework For Non-Interest Financial Institutions

The Central Bank of Nigeria (CBN) has reaffirmed its commitment to strengthening Shariah governance, regulatory clarity, and risk management in the non-interest financial services industry as part of efforts to sustain public confidence, financial stability, and the orderly growth of the sub-sector.

The commitment was restated at the 2nd Annual Interactive Session between the CBN Financial Regulation Advisory Council of Experts (FRACE) and the Advisory Committees of Experts (ACE) of Non-Interest Financial Institutions, held at the CBN Auditorium.

In a welcome address delivered on behalf of the Deputy Governor, Financial System Stability, Mr. Philip Ikeazor, the Director, Financial Policy and Regulation Department, Dr. Rita Ijeoma Sike, described the session as a strategic platform for deepening the credibility, resilience, and soundness of the non-interest financial services industry.

Mr. Ikeazor noted that the engagement builds on the foundation laid during the inaugural session and reinforces the Bank’s strong commitment to sustaining a sound, credible, and resilient non-interest financial system anchored on robust governance, effective compliance, and prudent risk management.

He emphasised that Non-Interest Financial Institutions (NIFIs) continue to play an increasingly strategic role in Nigeria’s financial system by providing ethical and Shariah-compliant alternatives to conventional finance, while contributing meaningfully to financial inclusion, real sector financing, MSME development, and shared prosperity.

The Deputy Governor, however, observed that as the industry grows in size, sophistication, and interconnectedness, it faces unique risks, particularly non-compliance risk, governance challenges, operational vulnerabilities, and emerging technological risks.

He warned that such risks, if not properly managed, could undermine public confidence, financial stability, and the overall credibility of the non-interest finance ecosystem.

He explained that the establishment of FRACE and the mandatory constitution of ACEs in every NIFI were designed to institutionalise an effective, harmonised, and resilient governance framework across the industry.

He added that sustained interaction between FRACE and ACE remains central to ensuring that regulatory expectations are clearly understood and consistently applied.

“The objectives of today’s session include fostering the institutionalisation and effective operation of a robust Shariah governance system within Non-Interest Financial Institutions, and providing a structured platform for dialogue, knowledge-sharing, and collaboration” he stated.

In his opening remarks, the Deputy Chairman of FRACE, Prof. Bashir Aliyu Umar, stressed that the interactive session was aimed at strengthening governance in the sub-sector and providing a platform for positive and constructive engagement between the CBN FRACE and the ACEs of NIFIs.

He commended the CBN Management for reviving the interactive session, which was first instituted in 2014.

Earlier, in her welcome remarks, Dr. Rita Ijeoma Sike, Director, Financial Policy and Regulation Department, reaffirmed the Bank’s commitment to fostering a strong, credible, and well-governed non-interest financial services industry.

She noted that the growing diversity of products, institutions, and delivery channels particularly with the emergence of Islamic fintech, underscores the need for continuous dialogue, sound regulatory oversight, and robust advisory input from scholars and practitioners.

The session featured two technical presentations. The first, delivered by Prof. Bashir Aliyu Umar, was titled “Shariah Non-Compliance Risk in Non-Interest Banks and its Impact on the Non-Interest Financial Services Industry.”

The second presentation, on “Islamic Fintech and Financial Inclusion,” was delivered by Muhammad Kabir Muhammad and Mustapha Ishaq.