The Central Bank of Nigeria (CBN) has issued a strong warning to non-interest financial institutions to strengthen their governance and compliance frameworks, warning that lapses could damage public confidence and pose risks to the stability of the country’s expanding Islamic finance industry.
The alert was delivered on Monday during the 2nd Annual Interactive Session between the CBN Financial Regulation Advisory Council of Experts (FRACE) and the Advisory Committees of Experts (ACEs) of Non-Interest Financial Institutions, held at the CBN Auditorium in Abuja.
Deputy Governor for Financial System Stability, Philip Ikeazor, who spoke through Dr. Rita Sike, Director of the Financial Policy and Regulation Department, highlighted the growing vulnerabilities facing the sector.
“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,” Ikeazor said.
He cautioned that failure to manage these risks effectively could undermine public trust, financial stability, and the credibility of the entire non-interest finance ecosystem.
Strategic Importance of Islamic Finance
The CBN emphasized that non-interest banks now play a vital role in Nigeria’s financial system by offering ethical, Shariah-compliant financial services. These institutions support financial inclusion, real sector development, MSME financing, and broader economic prosperity.
The apex bank noted that the establishment of FRACE and the mandatory formation of ACEs in all non-interest institutions were designed to create a robust and harmonised Shariah governance structure across the industry.
Focus on Stronger Collaboration
The interactive session was aimed at reinforcing Shariah governance standards, enhancing regulatory understanding, and promoting effective risk management practices. It also provided a platform for open dialogue, knowledge sharing, and collaboration between regulators and industry experts.
FRACE Deputy Chairman, Prof. Bashir Umar, welcomed the revival of the annual engagement, which was first introduced in 2014, describing it as essential for strengthening governance in the sub-sector.
Dr. Rita Sike, in her welcome address, stressed the need for continuous stakeholder engagement, especially with the rapid evolution of products and the rise of Islamic fintech.
“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,” she said.
Key Discussions and Recommendations
Technical sessions addressed critical topics including Shariah non-compliance risks in non-interest banks and the potential of Islamic fintech to drive greater financial inclusion.
Participants at the event included FRACE members, ACE chairmen, managing directors of non-interest banks, senior CBN officials, and representatives from the Bank of Industry and the Securities and Exchange Commission.
Experts at the forum also advocated for increased issuance of Sukuk bonds to deepen the Islamic capital market, unlock long-term financing for infrastructure projects, and expand financial inclusion across the country.
The CBN reaffirmed its commitment to building a resilient, well-regulated, and trustworthy non-interest financial services sector as it continues to expand its footprint in Nigeria’s economy.
