The Central Bank of Nigeria has raised concerns over potential governance and compliance lapses within the country’s non-interest financial sector, warning that such weaknesses could threaten public trust and financial system stability.
The caution was issued on Monday 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 apex bank’s auditorium in Abuja.
Representing the Deputy Governor for Financial System Stability, Philip Ikeazor, the Director of the Financial Policy and Regulation Department, Rita Sike, said the rapid growth of Islamic finance in Nigeria had exposed the industry to increased operational and regulatory risks.
According to the statement, “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.”
The CBN explained that the engagement formed part of its broader efforts to improve Shariah governance standards, strengthen risk management practices, and enhance regulatory clarity across the non-interest banking sector.
It noted that non-interest financial institutions were becoming increasingly significant within Nigeria’s financial landscape by offering ethical and Shariah-compliant alternatives to conventional banking services.
The bank added that these institutions were also supporting financial inclusion, funding for the real sector, development of micro, small and medium enterprises, as well as shared economic prosperity.
The apex bank further stated that the establishment of the Financial Regulation Advisory Council of Experts and the compulsory formation of Advisory Committees of Experts in all non-interest financial institutions were aimed at creating a unified governance framework for the industry.
According to the statement, continuous collaboration between FRACE and ACEs was essential to ensure proper understanding and consistent implementation of regulatory expectations throughout 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,” Ikeazor was quoted as saying.
Speaking at the event, the Deputy Chairman of FRACE, Prof. Bashir Umar, said the meeting was designed to deepen governance standards within the non-interest finance industry while encouraging productive engagement between regulators and advisory committees.
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He also praised the CBN leadership for reviving the interactive session, which was originally introduced in 2014.
In her welcome address, Sike reiterated the central bank’s dedication to building a resilient and properly regulated non-interest financial services sector.
She stressed that the increasing range of products and service channels, especially the rise of Islamic fintech, had made stronger oversight and sustained stakeholder engagement more necessary.
“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.
The session included technical discussions on Shariah non-compliance risks in non-interest banks and the contribution of Islamic fintech to financial inclusion.
Among those in attendance were members of FRACE, chairmen and members of various ACEs, managing directors of non-interest banks, senior CBN officials, and representatives from the Bank of Industry and the Securities and Exchange Commission.
It was earlier reported that stakeholders in Nigeria’s non-interest finance sector advocated for more frequent and larger Sukuk issuances to strengthen the market, attract long-term infrastructure financing, and expand financial inclusion amid growing volatility in global markets.