How To Start And Own A Bank In Nigeria: There are many rationales for why many people don’t even contemplate starting their own institutions. It is usual to draw the conclusion that establishing a bank account is something that almost everyone discusses. Opening and owning a bank of yours slips conversations every now and then. However, starting and running a bank is as likely as rain.
It’s not easy starting and maintaining your own bank. You’ll undoubtedly travel through some rough terrain, particularly given Nigeria’s stifling economic climate. Therefore, it is important that you conduct research before choosing to enter the banking business.
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Tips On How To Establish And Own A Bank In Nigeria
1. Learning About The Financial Services Industry: Money is one of the most complex motivating factors in any community or collection of people, so any proprietor who wants to thrive in the financial industry, such as banking, needs to have a broad knowledge foundation.
The person’s financial IQ must be significantly higher than average and they must be aware of how the finance industry operates. You need to be familiar with the financial indexes and governing principles of this extremely intricate industry.
2. Getting Experience In Banking: Starting a bank is different from starting a store or grocery because starting a bank requires extensive expertise as well as in-depth research on other banks that are already in operation.
Since there is no book or website that can teach you everything about the financial sector, working for a bank or more before starting your own is a requirement.
3. Choose The Type Of Bank You Would Like To Start: You can establish or choose from a variety of groups or kinds of banks, such as a microfinance bank, business bank, or community bank, just as was mentioned above.
It is crucial to remember that each of these banks has a number of requirements in order to obtain their licenses, so you must decide which of those requirements you can fulfill in order to decide which bank you will establish or at least begin with.
4. Carry Out A Feasibility Study Based n Your Industry: The majority of companies that fail globally do so due to inadequate research and viability studies. You must conduct adequate research to prevent pitfalls and occupational hazards that can arise when opening a bank.
This may require you to be in the middle of another sinking ship in order to identify the issue, gain first-hand experience, and report on what those unfortunate events can be. If you conduct a thorough analysis, you can avoid the shortcomings of other institutions, giving you a significant edge over your rivals.
5. Increase Your Investment and Partners: Aside from their lives and the need to endure through them, people are cautious with their money. No one wants to work hard and make a living only to lose it in the blink of an eye.
Everybody desires their money to grow safely and equitably. The purpose of the capital foundation is to persuade the public and your clients that you are able to manage their funds and prevent future company owner bankruptcy. The capital foundation required to launch any banking structure differs by category and can reach millions of dollars; it is not a chicken-and-egg issue.
After determining the startup cash basis, you must find partners by offering them stock to participate in the bank. To avoid damaging the reputation of the business, you must make sure that the partners you choose do not have dubious riches or morals.
6. Purchase A License: It is important to keep in mind that getting your banking license will take some time because they will need to conduct their investigations and follow due procedure to ensure that the customers’ money will be safe in your custody.
In this case, the authority is the CBN (Central Bank of Nigeria). When these inquiries are properly completed, you can be guaranteed to receive this certificate.
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7. Register Your Bank Name With Appropriate Bodies: You must establish your bank name with the CAC (Corporate Affairs Commission) in order to be distinctive when conducting business. It sets you apart from other company proprietors or other institutions.
You must choose a name for your bank that inspires power and safety; it must convey to the public the values and qualities of your bank.
8. Obtaining Space For Your Business: The next step is to acquire a location for your company; these locations cannot be in one location; you must have multiple locations for your business once everything regarding your licensure and registration is in order. It is preferable to commence in the main cities of the nation before expanding to other smaller ones until you are well-known throughout the entire country.
It’s important to keep in mind that building these structures is not a simple task; you may choose to purchase land and start from zero or rent buildings and make changes to fit your company needs. It’s important to buy and place furniture and other items correctly. Make sure that these locations are also close to the business’s main region, and don’t be intimidated by the rivalry.
9. Advertising And Marketing: It is also crucial to remember at this time that you must promote and publicize your bank to the general public given the abundance of other banks that have entered the banking industry. Advertising and marketing should be used to make the public aware of everything you are doing differently and better. This will help you draw current bankable customers from other banks or acquire new customers who were previously unbankable.
Use all of the media channels at your disposal to reach the masses. This includes social media, websites, print media, and occasionally sponsoring programs. Be creative with your goods and fast to market them. These elevate the bank’s profile and place it in the public’s good favor.
10. Getting Expert Assistance: After all is said and done, you will need to hire qualified assistance to manage each bank location.
It is crucial to hire employees with a solid reputation in their field and commendable morals because this will determine how successful your business is.
Requirements For Obtaining Banking License
The following three conditions must be met in order to acquire a banking license in Nigeria.
1. Grant of approval in principle
2. Grant of final license
3. Pre-commencement of operation requirement
Grant of approval in principle: You must send a formal application for the license award, addressed to the Governor of the CBN (Central Bank of Nigeria), along with the supporting documentation listed below, in order to receive permission in theory.
1. A brief analysis of the proposed bank’s viability;
2. A sketch of the planned bank’s articles of association and memorandum;
3. A summary of the proposed Bank’s shareholders, executives, and top officials, along with their contact information;
4. Application fee
5. Any additional paperwork that CBN may ask for when reviewing your application.
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Conditions for Final License Grant
1. Stated licensing fee
2. 3 verified true versions of the bank’s articles of association, certificate of incorporation, Form CAC 2 (share allocation), and Form CAC 7 (directors’ particulars);
3. Evidence of the suggested head office’s site to ensure efficient operations of everyday work
4. Bullion vans equipped with the required security tools and staff;
5. Evidence of a strong chamber (safe), a loading dock, other banking machinery that is properly installed, and amenities for a banking hall;
6. Evidence that I.T. technology has been installed or that operations have been computerized;
7. The complete executive team’s acceptance and offer letters
Pre-Commencement of Operations Requirements
1. Proof of enrollment in the clearing house;
2. The Pre-Commencement Board Meeting Minutes;
3. A replica of the shareholders registry;
4. A duplicate of the share document sent to every purchaser;
5. Evidence that checks and other security documents are ready;
6. Evidence of insurance plans and proof of payment;
7 Proof of sufficient security measures.
In conclusion, due to the sensitivity of the finance and banking sectors, it may take several months or even years to complete all the steps above, based on how rapidly each step is completed. This is done to make sure the envisioned, recently authorized bank can manage everything related to public money.
Edeh Samuel Chukwuemeka, ACMC, is a lawyer and a certified mediator/conciliator in Nigeria. He is also a developer with knowledge in various programming languages. Samuel is determined to leverage his skills in technology, SEO, and legal practice to revolutionize the legal profession worldwide by creating web and mobile applications that simplify legal research. Sam is also passionate about educating and providing valuable information to people.