Many entrepreneurs, start-ups and foreign organisations are showing interest in digital money lending company.
The reason is simple. A lot of activities is ongoing in this space. It is obviously the reason why people today seek information on how to set up a digital money lending company in Nigeria.
In this article, we have covered all of the details that can help you kick off your adventure into the digital money lending market in Nigeria.
Let’s begin with some information about the industry itself.
The Digital Money Lending Industry
The digital money lending industry is strictly regulated. Therefore, it is important to clarify certain important details you have to take note of to set up a digital lending service in Nigeria.
To be a digital lender in Nigeria or to operate a digital lending platform, you need a licence. But first, who are digital lenders?
Digital lenders are credit facilities and loan providers that make these services accessible to customers from a digital perspective.
To begin in the digital money lending market, you need a licence.
Thus, we would proceed to look at licensing procedures and requirements the law demands.
Licencing Procedures To Operate A Digital Money Lending Company In Nigeria
Step 1:
Incorporate a company with CAC in Nigeria with a minimum of twenty million minimum share capital.
Step 2:
Obtain CBN’s License.
Digital lenders like Fairmoney, and Renmoney use the Micro Finance Bank License. There is no actual licence for digital lenders in Nigeria. However, you need to abide by the prescribed State Money Lending License.
The procedure on how to obtain a money lender’s license in Nigeria may vary with the particular state involved.
The next subheading below outlines the procedure for obtaining a money lenders license in Lagos State, Nigeria.
Steps To Acquire A Money Lender’s Licence In Lagos State, Nigeria
Step 1:
Formal application to State’s Commissioner of Police accompanied by incorporation documents and formal application of applicant
Step 2:
Upon issuance of clearance report by the Police, make the required application to Chief Magistrate accompanying the required incorporation documents
Step 3:
Upon confirmation of due diligence and issuance of money lender’s certificate alongside recommendation for the issuance of a money lender’s license.
Afterwards, send a formal application the Lagos State Ministry of Home Affairs attaching the following:
- Evidence of payment of tax for all directors (for the past 3 years);
- If it’s not a new company, the applicant must also attach a company’s tax clearance certificate.
- A reference letter from the company’s bankers;
- Proof of payment of the Money Lenders License fee in the sum of N200,000 (Two Hundred Thousand Naira);
- Proof of Application Form Fee of N25,000 (Twenty-Five Thousand Naira)
Step 4: After due confirmation, physical visit to office and satisfaction of all requirements, you’d acquire the Money Lender’s License which is valid for one year.
Importantly, other than the above application requirements, the FCCPC 2022 guidelines has provided a digital lending guideline Form 001. The form is to be filled with certain documents attached.
Procedure for Digital Lenders Registration With FCCPC
Below are the procedures for digital lenders registration with FCCPC.
1. Applicants are to download and completely fill out the Forms (Form 001 and 002) from the Commission’s website.
2. Applicants should attach the documents listed out in the First Schedule of this document.
3. Applicants incorporated before April 2023 are required to provide a Statement of Justification that sufficiently articulates an acceptable reason for failing to conclude or complete the registration before the expiration of the previously set deadline.
4. Applicants incorporated before April 2023 are required to make payment of the late Processing Fee in the sum of Five Hundred Thousand Naira (₦500,000.00) via the Remita platform. Please note that this affords the Applicant the opportunity of registering two (2) apps.
Note: Applicants incorporated after April 2023 are exempt from paying the late Processing Fee.
5. Applicants are allowed to register a maximum of five (5) apps only. 6. Applicants desirous of registering additional apps shall pay an additional fee of Five Hundred Thousand Naira (₦500,000.00) for each additional app.
7. Applicants can commence the registration process while applying for and awaiting the Audit Trust mark from the Nigerian Data Protection Commission and the Compliance Audit Report and Privacy Impact Assessment Report from a duly registered Data Protection Compliance Organisation (DPCO).
8. Applicants licensed by the Central Bank of Nigeria as a Microfinance Bank are required to apply to the Commission for a Waiver from registration. Such Applicants must however, fill and submit the Forms (Form 001 and 002) and attach the documents listed out in the First Schedule of this document.
It is vital to point out that procedures for application for money lender’s license varies with the state. While we have explored the procedures in Lagos State.
Furthermore, legal advisory is necessary for a robust information on the licensing framework for money lending in Nigeria.
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References
- https://www.mondaq.com/nigeria/financial-services/1255952/how-to-obtain-a-digital-money-lending-license-in-nigeria accessed on April 19 2023.
- https://www.mondaq.com/nigeria/financial-services/1255952/how-to-obtain-a-digital-money-lending-license-in-nigeria. Accessed on 7th August, 2024.
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