Bank of Industry receives CBN licence for alternative finance window
The Bank of Industry has obtained regulatory clearance from the Central Bank of Nigeria to establish a Non-Interest Banking window, a development the development finance institution says will broaden financial access for ethically motivated enterprises and underserved segments of the economy.
According to a statement issued by the bank, the approval authorises BoI to commence Non-Interest Banking operations using Shariah-compliant structures that avoid conventional interest-based lending models. The new window is expected to support businesses and entrepreneurs who have historically refrained from accessing formal credit due to religious or ethical considerations.
“This licence marks a pivotal moment in the bank’s journey of transforming Nigeria’s industrial sector. With this licence we can reach a new category of borrowers who before now could not be served,” the Managing Director of BoI, Dr. Olasupo Olusi, said in the statement.
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The approval positions BoI as one of a growing number of Nigerian financial institutions offering alternative financing structures under regulatory oversight. Non-interest banking, also known as Islamic banking, operates on the principle of risk-sharing rather than interest accrual, and typically involves the financing of physical assets, profit-sharing arrangements, or cost-plus sales contracts.
Under the new framework, BoI will be authorised to finance the acquisition of assets and raw materials for customers using approved non-interest products. The bank said the window will support its broader mandate to promote inclusive industrial development, particularly among Micro, Small and Medium Enterprises and other high-impact business segments that have remained outside the reach of traditional financial services.
The statement noted that the approval reflects the CBN’s confidence in the bank’s ability to implement responsible financing practices. It added that the new operations will enable BoI to mobilise ethical funding, scale its outreach, introduce innovative financing solutions, and deepen support for the real economy.
Nigeria’s non-interest banking sector has grown steadily since the CBN released its framework for non-interest financial institutions in 2011. The framework was designed to tap into segments of the population that shun interest-based transactions on religious or ethical grounds, particularly among Muslim-majority communities in the northern regions, as well as faith-sensitive businesses across the country.
Several commercial banks, including Jaiz Bank, which pioneered full-fledged non-interest banking in Nigeria, have since entered the sector. Other tier-one lenders such as Stanbic IBTC, Sterling Bank, and Unity Bank also run non-interest windows. The model has gained traction not only for its religious appeal but also for its emphasis on asset-backed financing and ethical investment principles.
BoI’s entry into this space aligns with its mandate as Nigeria’s foremost industrial development bank. Established in 2001 through the merger of several defunct development finance institutions, BoI has focused on providing long-term financing to enterprises in the manufacturing, agro-processing, and services sectors. Its activities have traditionally targeted job creation, value addition, and the stimulation of domestic production capacity.
The bank has faced challenges common to development finance institutions in Nigeria, including limited capital base, exposure to high-risk sectors, and the need to balance developmental objectives with financial sustainability. The introduction of a non-interest banking window is seen as part of efforts to diversify funding sources and expand its client base without compromising its core mission.
Analysts have noted that non-interest banking presents opportunities for development finance institutions to access pools of capital that remain wary of conventional banking products. Ethical investors, sovereign wealth funds from Gulf states, and multilateral Islamic finance institutions represent potential sources of funding that could strengthen BoI’s balance sheet and enhance its capacity to support industrial projects.
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The statement from BoI highlighted that the new window will enable the bank to drive inclusive growth and align its financing activities with social and developmental objectives. It described the move as a strategic response to gaps in financial inclusion, particularly among enterprises that face barriers to accessing traditional credit due to religious beliefs, lack of collateral, or limited credit history.
Faith-sensitive financing has emerged as a policy priority in several Nigerian states, particularly in the northern region where governments have explored Shariah-compliant instruments for infrastructure funding and social programs. The CBN has similarly promoted non-interest banking as part of its broader financial inclusion agenda, aiming to bring more Nigerians into the formal financial system.
However, the sector has also encountered operational and regulatory complexities. Critics have pointed to issues such as limited product diversity, challenges in liquidity management, and questions around the adequacy of Shariah governance structures within institutions. The CBN has continued to refine its regulatory framework to address some of these concerns and encourage more participation from deposit money banks and other financial institutions.
BoI’s new licence comes at a time when the federal government is intensifying efforts to revitalise the country’s manufacturing sector and reduce dependence on imports. Non-interest banking’s emphasis on asset-backed financing and productive investment could complement these policy goals, especially in sectors such as agriculture, textiles, leather goods, and light manufacturing, where access to affordable long-term finance remains a constraint.
The bank did not specify a timeline for the full rollout of the non-interest window or detail the specific products it plans to offer under the new licence. It also did not disclose the capital allocation or operational structure that will support the new unit. Industry observers expect BoI to adopt a phased approach, beginning with pilot products and gradually expanding its suite of services based on market response and regulatory feedback.
The approval is expected to increase competition in Nigeria’s non-interest banking space, which remains relatively small compared to the conventional banking sector. Data from the CBN shows that non-interest banking assets constitute less than two percent of total banking sector assets, indicating significant room for growth.