CBN NIFI Compliance Checklist for Nigerian Non-Interest MFBs

The CBN Guidelines for the Regulation and Supervision of Non-Interest Financial Institutions (NIFI Guidelines) are the primary regulatory instrument for Nigerian non-interest microfinance banks. If you are preparing for a CBN examination or building out your compliance posture, this checklist covers the core requirements your institution needs to demonstrate.

This is a reference document, not a substitute for the full guidelines. The complete CBN NIFI Guidelines document should be obtained directly from the CBN.

1. Governance and Shariah Governance Framework

Advisory Committee of Experts (ACE)

The ACE is the centrepiece of the Shariah governance structure. Your institution must demonstrate:

• ACE is constituted with a minimum of three members who are qualified Shariah scholars
• At least one ACE member must be resident in Nigeria
• ACE members’ qualifications and appointments have been approved by the CBN
• ACE has a formal Terms of Reference or Charter approved by the Board
• ACE meets at a minimum frequency as prescribed (typically quarterly)
• ACE minutes are properly documented and retained
• ACE opinions and Fatwas are in writing, numbered, and filed
• Conflicts of interest for ACE members are declared and managed

Board-Level Oversight

• The Board has adopted a Shariah Compliance Policy
• There is a Board-level Shariah Compliance Committee (or the full Board takes this role)
• At least one Board member has sufficient understanding of Islamic finance

2. Product Standards and Shariah Compliance

Product Approval Process

Each product your institution offers must have:

• A Fatwa from your ACE approving the structure
• A written product paper describing the legal structure, contracts involved, and income recognition basis
• ACE approval dated before the product was offered to customers
• Annual ACE review confirming the product is being operated per its Fatwa

Common Product Structures — Documentation Checklist

Murabaha (cost-plus sale):

• Underlying asset exists at point of transaction
• Bank takes ownership of asset before selling to customer
• Selling price (cost + markup) is disclosed to customer
• Deferred income is recognised over the tenor per AAOIFI FAS 2, not upfront
• No reference to “interest rate” in any customer-facing document or GL account

Mudarabah (profit-sharing deposits):

• Investment accounts are clearly distinguished from demand deposits
• Profit-sharing ratio (PSR) is declared in the account agreement
• Profit distribution is calculated from actual profits, not a predetermined rate
• Indicative return disclosures clearly state “not guaranteed”
• Mudarib (bank) and Rabb al-mal (depositor) shares are tracked in the GL

Esusu / Group Savings Schemes:

• Group is constituted with proper documentation
• Rotation schedule and member contributions are documented
• No interest charged on late contributions (administrative fees only, if ACE-approved)

3. Capital Adequacy and Prudential Requirements

MFB prudential requirements are set by the CBN Microfinance Bank Prudential Guidelines, which apply alongside the NIFI Guidelines. Key thresholds:

Note: Capital adequacy ratios for non-interest MFBs follow a modified framework — consult the current CBN circular for the precise ratio requirements, as these have been subject to revision.

Risk-Weighted Assets

• Risk weights are applied per CBN guidelines
• Non-performing financing (PAR > 90 days) is fully provisioned
• Investment accounts do not count as borrowings in the capital computation

4. Reporting Obligations

CBN Returns

The following returns are typically required for non-interest MFBs:

• Returns are generated directly from the GL, not manually compiled
• Return submissions are logged and receipts retained
• Variance analysis is performed before submission

NDIC Reporting

• NDIC annual returns are filed on time
• Non-interest deposit premium is calculated correctly (non-interest MFBs pay a reduced premium)

5. Anti-Money Laundering and CFT

• AML/CFT Policy is approved by the Board and reviewed annually
• Customer due diligence (CDD) procedures cover BVN/NIN verification
• Enhanced due diligence (EDD) procedures are in place for high-risk customers
• Suspicious Transaction Reports (STRs) are filed with NFIU when required
• Currency Transaction Reports (CTRs) are filed for qualifying cash transactions
• Staff AML/CFT training is conducted annually and documented
• A designated Money Laundering Reporting Officer (MLRO) has been appointed

6. Consumer Protection

• Profit rates (markups, PSRs) are disclosed to customers in plain language
• Customers receive written confirmation of Murabaha selling price and schedule
• Profit distribution statements are issued to Mudarabah depositors
• A formal complaint resolution process is in place and communicated to customers
• No product is marketed using the word “interest” or with an “interest rate” disclosure

7. Technology and Systems

• Core banking system generates CBN returns directly from the GL
• GL chart of accounts is aligned with AAOIFI financial accounting standards
• Audit trails are maintained for all transactions (immutable)
• Four-eyes (maker-checker) controls are enforced for critical transactions
• Disaster recovery procedures are documented and tested

Preparing for a CBN NIFI Examination

When a CBN examiner visits, they will typically request:

1. ACE minutes from the preceding 12 months
2. Fatwa files for all active products
3. GL extract and trial balance for the examination period
4. CBN return submissions and acknowledgements
5. AML/CFT policy and STR/CTR logs
6. Sample customer files — checking KYC documentation and product agreement structures

Having your ACE Fatwa repository, CBN return generation, and audit trail accessible in your core banking platform significantly reduces examination preparation time.

This checklist is provided for reference purposes. The definitive compliance requirements are set by the CBN NIFI Guidelines and related circulars, which should be consulted directly. MizanCore does not provide legal or Shariah compliance advice.