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Part of the guideIs your money safe in a Nigerian fintech?
The short answer
A commercial bank is usually the safer place for large balances: it must hold far more capital and its deposits are insured by the NDIC up to ₦5 million, against ₦2 million at a microfinance bank. A well-run, licensed microfinance bank is safe for amounts within its ₦2 million insured limit, so the practical answer is to keep balances under each institution's limit rather than to avoid one type entirely.
Both are banks. Both are licensed and supervised by the Central Bank of Nigeria (CBN), and deposits at both are insured by the Nigeria Deposit Insurance Corporation (NDIC). The differences are in size, scope, capital and the insured limit. Those differences matter more as your balance grows. For how this fits with fintech apps, BVN rules and data protection, start with our guide is your money safe in a Nigerian fintech?
The differences that affect safety
| Commercial bank | Microfinance bank (MFB) | |
|---|---|---|
| Licensed by | CBN | CBN |
| Who it is for | Everyone, including large companies and government | Individuals, small businesses and under-served communities |
| Minimum capital (current rules) | ₦500 billion (international), ₦200 billion (national), ₦50 billion (regional) | ₦5 billion (national), ₦1 billion (state), ₦200 million (unit) |
| NDIC cover per depositor | ₦5,000,000 | ₦2,000,000 |
| Where it may operate | Depends on licence: regional, national or international | Unit (one location), state, or national |
| Lending | Full range | Smaller loans, with limits on size and concentration |
Capital is the cushion a bank uses to absorb losses before depositors are affected. The CBN's recapitalisation programme, launched in March 2024 with a deadline of 31 March 2026, raised commercial bank minimums sharply; the CBN said on 1 April 2026 that 33 banks had met the new requirement. MFB minimums were last raised in a review announced in October 2018, with existing MFBs given until April 2020 to comply.
Why more microfinance banks fail
Nigeria has hundreds of licensed MFBs, many of them small unit banks serving a single town or market. Small institutions with concentrated loan books are more exposed to a run of bad loans, weak governance or a local economic shock. That shows up in the numbers.
- In May 2023 the CBN revoked the licences of 132 microfinance banks, alongside four mortgage banks and three finance companies.
- On 1 July 2026 it revoked a further 46 MFB licences. The reasons it gave included lacking assets to cover liabilities, stopping operations without approval, failing to start operating within 12 months of licensing, and not maintaining minimum capital.
- By 31 July 2026 the NDIC had paid ₦1.48 billion to 10,312 depositors of 47 recently closed MFBs.
Commercial banks fail too, though less often. Heritage Bank lost its licence in June 2024, and the NDIC has since paid ₦54.23 billion to 715,529 insured depositors. The lesson from both is the same: insurance works up to the limit, and the limit is lower at an MFB.
Unit, state and national MFBs
Under the CBN's microfinance bank guidelines, a unit MFB operates from a single location, a state MFB may open branches within one state, and a national MFB may operate across the country. Unit banks are further split into Tier 1 (urban and well-banked areas) and Tier 2 (rural and under-banked areas). The higher the category, the more capital the bank must hold and the more closely its size is matched to its reach. When people talk about MFBs failing, they are mostly talking about the smallest unit banks.
Digital banks, apps and MFB licences
Many of the best-known Nigerian finance apps hold a microfinance bank licence, or partner with one, because it is the most accessible deposit-taking licence. That means the app on your phone may carry the ₦2 million MFB limit rather than the ₦5 million commercial bank limit, even if it serves millions of customers. Some large MFBs behind popular apps are national MFBs with substantial capital and modern risk systems; their profile is very different from a single-branch unit bank in a market town.
The point is to read the small print. The app's terms, or the bottom of its website, should name the licensed institution that holds your deposits. That name, not the app's brand, is what decides your insured limit.
A worked example: ₦3.5 million in savings
Chidi is saving ₦3,500,000 for a car. He likes the interest rate and app at an MFB and the branch network of a commercial bank.
| Option | Insured | Uninsured if that bank fails |
|---|---|---|
| All ₦3,500,000 at the MFB | ₦2,000,000 | ₦1,500,000 |
| All ₦3,500,000 at the commercial bank | ₦3,500,000 | ₦0 |
| ₦2,000,000 at the MFB, ₦1,500,000 at the commercial bank | ₦3,500,000 | ₦0 |
The split gives him the MFB's rate on most of his money with no uninsured exposure. Our explainer on NDIC deposit insurance limits shows how balances at one institution are added together.
What to check before choosing either
- Licence. Confirm the exact legal name on the CBN's list of licensed institutions and the NDIC's list of insured institutions. Our step-by-step guide to checking a CBN licence covers this.
- Category. For an MFB, note whether it is unit, state or national. A national licence requires the most capital.
- Track record. How long has it operated? Does it publish audited accounts? Is it part of a larger, regulated group?
- Rates. If the interest offered is far above Treasury bill yields, ask how the bank can afford it.
- Service and complaints. Does it publish a complaints process, and does it answer? A slow response to a small problem is a signal.
So which is safer?
For a balance above ₦2 million, a commercial bank offers more insured protection at a single institution, and its larger capital base makes failure less likely. For a balance within ₦2 million, a licensed, active MFB that passes the checks above gives the same protection that matters most: if it fails, the NDIC pays you in full. Many people use both: a commercial bank for large balances and salary, and an MFB or fintech account for everyday spending and goal savings.
Where Pryme fits
Pryme Financial Ltd is a technology company that runs the app; it is not itself a bank. In Nigeria, Naira deposits are held by Solid Allianze Microfinance Bank Ltd, licensed by the CBN and insured by the NDIC up to the applicable limit per depositor, currently ₦2,000,000 for a microfinance bank. Like any MFB, Solid Allianze also lends: it is the lender behind Spaces credit, which can be spent only with merchants in Pryme's Spaces ecosystem; a limit may be offered based on how your account is run, and the agreement is shown in full and accepted before anything is drawn. Credit decisions draw on Nigeria's licensed credit bureaus, and as a CBN-licensed lender, Solid Allianze's credit activity sits within Nigeria's credit-reporting system, so repaying on time helps build a credit history. The Investment Savings Box works differently from the other Boxes. The money in it funds Solid Allianze's lending, including Spaces credit, which is where its return comes from and why it is held to a fixed date. That means the return depends on how the lending book performs, and the money is not available before maturity. Check the terms in the app for how it is protected before you put money in. Read how the structure works on How it works and our entities page.
If you keep more than ₦2 million, we would give you the same advice as above: hold the excess at another licensed institution. For the full checklist on any provider, see our guide to fintech safety in Nigeria.
Questions people ask
Are microfinance banks safe in Nigeria?
Licensed MFBs are supervised by the CBN and insured by the NDIC up to ₦2 million per depositor. Some do fail, mostly small unit banks, and the NDIC pays insured depositors. Keep balances within the limit at each MFB.
Why do microfinance banks pay higher interest?
They often compete for deposits against larger banks and lend at higher rates to small borrowers. Higher rates can also reflect higher risk, so check the bank's licence category, track record and capital before chasing the rate.
Can a microfinance bank give me a NUBAN account number?
Yes. Licensed MFBs issue standard 10-digit NUBAN account numbers and connect to the same national transfer systems as commercial banks.
What happens to my money if a microfinance bank's licence is revoked?
The NDIC becomes liquidator and pays insured deposits, up to ₦2 million, often directly into another account linked to your BVN. Amounts above that are repaid later from recovered assets.
Is a commercial bank 100% safe?
No institution is. Commercial banks hold more capital and carry ₦5 million NDIC cover per depositor, but they can fail, as Heritage Bank did in 2024. Keep balances above the limit spread across banks.
Sources
- Mondaq: status update on CBN's banking sector recapitalisation · accessed Oct 2026
- Ecofin Agency: CBN raises minimum capital requirements for microfinance banks · accessed Oct 2026
- Africa Check: Nigeria's central bank revoked 46 microfinance bank licences, what happens now · accessed Oct 2026
- CBN: revocation of licences of 46 microfinance banks (2026) · accessed Oct 2026
- Arise News: NDIC pays N1.48bn to 10,312 depositors of 47 failed microfinance banks (Oct 2026) · accessed Oct 2026
- Nairametrics: NDIC raises deposit insurance coverage, May 2024 · accessed Oct 2026
- Templars: CBN Microfinance Bank Guidelines 2020 · accessed Oct 2026
This article is general information, not financial, legal or tax advice. Products described are provided under the terms on this site and are subject to regulation and eligibility.