CBN Warns of Rising Risks in Non-Interest Finance Industry
The Central Bank of Nigeria has raised concerns over growing governance, compliance, operational and technological risks confronting the country’s non-interest financial services industry, warning that failure to effectively manage the challenges could undermine public confidence and financial stability.
The warning was issued during the 2nd Annual Interactive Session between the CBN Financial Regulation Advisory Council of Experts and the Advisory Committees of Experts of Non-Interest Financial Institutions held at the CBN Auditorium on May 7, 2026.
Speaking on behalf of the Deputy Governor, Financial System Stability, Mr Philip Ikeazor, the Director of Financial Policy and Regulation Department, Dr Rita Ijeoma Sike, said the engagement was aimed at strengthening governance, regulatory clarity, and risk management within the non-interest financial sector.
Ikeazor noted that non-interest financial institutions continue to play an increasingly strategic role in Nigeria’s economy by providing ethical and Shariah-compliant alternatives to conventional banking, while also supporting financial inclusion, MSME financing, and economic growth.
He, however, cautioned that the increasing size, sophistication, and interconnectedness of the industry had exposed the sector to unique risks, including Shariah non-compliance, governance gaps, operational vulnerabilities, and emerging technological threats.
According to him, such risks, if not properly addressed, could weaken the credibility of the non-interest finance ecosystem and threaten broader financial system stability.
The Deputy Governor explained that the establishment of the Financial Regulation Advisory Council of Experts and the mandatory constitution of Advisory Committees of Experts in all non-interest financial institutions were designed to institutionalise a harmonised and resilient governance framework across the industry.
He stressed that sustained engagement between FRACE and ACEs remained critical for ensuring that regulatory expectations are clearly understood and consistently implemented within the sector.
“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 remarks, the Deputy Chairman of FRACE, Professor Bashir Aliyu Umar, said the session was focused on strengthening governance and encouraging constructive engagement between regulators and industry experts. He commended the CBN for reviving the interactive session first introduced in 2014.
The event also featured technical presentations on Shariah non-compliance risks in non-interest banking and the growing role of Islamic fintech in advancing financial inclusion.
Participants at the session included members of FRACE, chairmen and members of various Advisory Committees of Experts, managing directors of non-interest banks, senior CBN officials, and representatives from the Bank of Industry and the Securities and Exchange Commission.