Obtaining a primary mortgage bank (PMB) license in Nigeria is governed exclusively by the Central Bank of Nigeria (CBN) under its Mortgage Banking Guidelines (CBN/NG/MBG/01/2019) and the Banks and Other Financial Institutions Act (BOFIA) 2020. Applicants must incorporate as a public company, satisfy stringent corporate-governance and fit-and-proper criteria, escrow substantial capital (₦8 billion for national, ₦5 billion for state PMBs), and submit a detailed feasibility study, business plan, compliance manuals, and directors’ credentials. Non-refundable fees include ₦1 million application and ₦2 million licensing fees. The CBN conducts due diligence within 90 days for Approval-in-Principle (AIP), followed by a compliance-check before final license issuance—total process: 6–9 months. Applicants must also budget for stamp duties (0.375% of secured amount) and legal/consultancy fees. Common misconceptions include underestimating capital requirements and confusing PMBs with commercial banks.
| License Category | Minimum Paid-up Capital | Application Fee | Licensing Fee | Total CBN Fees |
|---|---|---|---|---|
| National PMB (multi-state) | ₦8,000,000,000 | ₦1,000,000 | ₦2,000,000 | ₦3,000,000 |
| State PMB (single state/FCT) | ₦5,000,000,000 | ₦1,000,000 | ₦2,000,000 | ₦3,000,000 |
1. Regulatory Framework
1.1 Governing Laws
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Banks and Other Financial Institutions Act (BOFIA) 2020 empowers CBN to license and supervise mortgage banks.
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CBN Mortgage Banking Guidelines (CBN/NG/MBG/01/2019) detail licensing, capital, governance, and operational requirements.
1.2 Responsible Agency
The Central Bank of Nigeria (CBN), through its Banking Supervision Department, is the sole MDA for issuing PMB licenses, conducting due diligence, and enforcing post-license conditions.
2. Eligibility & Corporate Requirements
2.1 Corporate Structure
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Incorporate as a public limited company under the Companies and Allied Matters Act (CAMA).
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Minimum seven (7) and maximum twelve (12) directors; non-executives must outnumber executives.
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Board must include a Managing Director and Finance Director, each satisfying CBN’s fit-and-proper criteria.
2.2 Capital Requirements
| Category | Minimum Paid-up Capital | Source |
|---|---|---|
| National PMB | ₦8,000,000,000 | CBN/NG/MBG/01/2019 |
| State PMB | ₦5,000,000,000 | CBN/NG/MBG/01/2019 |
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Capital must be escrowed with CBN via NIBSS and will be released (20%) for pre-operational expenses post-AIP.
3. Step-by-Step Application Procedure
3.1 Pre-application Preparation
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Engage Legal & Technical Consultants to draft:
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Feasibility report & five-year financial projections
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Compliance/manual of operations
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Corporate governance framework.
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Board Resolution approving application and delegated signatories.
3.2 Submission for Approval-in-Principle (AIP)
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Address: Governor, Central Bank of Nigeria, Banking Supervision Department.
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Form MBG-01: Completed application form (downloadable from CBN website).
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Non-refundable Application Fee: ₦1,000,000 payable by bank draft to CBN.
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Attach: See Section 4 documentation.
3.3 CBN Review & AIP Issuance
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Timeline: CBN communicates AIP status within 90 days of receipt.
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Conditions: AIP letter stipulates conditions (e.g., finalising incorporation, meeting capital escrow).
3.4 Post-AIP Actions & Final License
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Incorporate with CAC only after AIP; submit AIP copy to CAC .
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Submit final documents (share certificates, audited statement of affairs, employment letters).
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Pay Non-refundable Licensing Fee: ₦2,000,000.
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CBN Compliance Check & Inspection; final license granted within 1–2 months after full compliance.
4. Required Documentation
| Document | Authority/Source | Notes |
|---|---|---|
| AIP application form (MBG-01) | CBN website | Duly signed |
| Feasibility report & five-year projections | External consultant | Detailed assumptions |
| Memorandum & Articles of Association (draft) | CAC | Certified true copy |
| Board resolution | Company Secretary | Authorising application |
| Shareholders’ register & share certificates | CAC | CTCs and originals |
| Evidence of capital escrow (NIBSS) | CBN | Bank statements |
| Manual of operations & compliance manual | Internal compliance | |
| Directors’ CVs, IDs, BVNs, credit-bureau reports | Company | Two credit reports per director |
| Tax clearance certificates (3 years) | FIRS | |
| Auditor’s report on paid-up capital | External auditor | Covering 6 months before & 3 months after deposit |
5. Fees & Other Costs
| Cost Item | Amount (₦) | Authority/Calculation |
|---|---|---|
| Application Fee | 1,000,000 | CBN Mortgage Guidelines |
| Licensing Fee | 2,000,000 | CBN Mortgage Guidelines |
| Escrowed Capital (National) | 8,000,000,000 | CBN Mortgage Guidelines |
| Escrowed Capital (State) | 5,000,000,000 | CBN Mortgage Guidelines |
| Stamp Duty on Security Documents (0.375%) | 30,000,000–45,000,000 | Stamp Duties Act; ad valorem on capital escrow |
| CAC Filing & Incorporation Fees | 85,000 for 1st Million–30,000 for subsequent Millions | CAC schedule |
| Legal & Consultancy Fees | 50,000,000–150,000,000 | Market estimate |
| Tax Clearance Processing | 50,000 | FIRS |
| Total Estimated Outlay | ≈₦8.05 billion (state) / ≈₦13.2 billion (national) | Includes all fees & escrowed capital |
6. Expected Timeline
| Stage | Duration |
|---|---|
| Preparation of documents | 1–2 months |
| Submission & AIP review | 3 months |
| Incorporation & final documentation | 1 month |
| Final CBN compliance inspection | 1–2 months |
| Total | 6–9 months |
7. Common Misconceptions
| Misconception | Reality |
|---|---|
| “PMB license = commercial bank license” | PMBs cannot operate current or savings accounts; they only grant long-term mortgage loans. |
| “Capital requirement is ₦2 billion” | Updated CBN guidelines require ₦8 billion (national) or ₦5 billion (state). |
| “Application fee covers all costs” | ₦1 million fee is only for AIP; licensing, capital escrow, stamp duties, and consultancy are separate. |
| “Can start operations immediately after AIP” | Must incorporate, satisfy post-AIP conditions, pay licensing fee, and pass compliance inspection before operations. |
| “No stamp duty required for capital escrow” | Security and share instruments attract 0.375% ad valorem stamp duty under Stamp Duties Act. |
8. Frequently Asked Questions
Q1: What is Approval-in-Principle (AIP)?
A: AIP is CBN’s conditional go-ahead, issued within 90 days of application, allowing incorporation and partial capital release.
Q2: Can foreign investors hold equity in a PMB?
A: Yes, subject to CBN’s foreign-exchange regulations. Foreign shareholding must comply with BOFIA limits and capital requirements.
Q3: Are PMBs allowed to accept deposits?
A: No. PMBs fund mortgage loans through term borrowings, NHF funds, and shareholders’ equity, not demand deposits.
Q4: What collateral is required for capital escrow?
A: Funds must be deposited in CBN’s escrow account via NIBSS; no other collateral accepted.
Q5: How soon can I access National Housing Fund (NHF)?
A: After final license and separate CBN clearance, PMBs may apply to Federal Mortgage Bank of Nigeria for NHF disbursement.
9. Conclusion
Securing a mortgage bank license in Nigeria is a capital-intensive, documentation-driven process strictly regulated by the CBN under BOFIA 2020 and the Mortgage Banking Guidelines (CBN/NG/MBG/01/2019). Prospective operators must escrow substantial capital, comply with corporate-governance and fit-and-proper criteria, and budget for fees and stamp duties. By following the detailed steps—preparing robust feasibility studies, timely submissions, and adherence to post-AIP conditions—applicants can navigate the 6–9-month process successfully, contributing to Nigeria’s housing finance ecosystem.
