ARTICLES

How to Verify CBN Approved Lenders Before Borrowing

Digital lending has made access to quick cash more convenient, but many borrowers still fall into the hands of illegal platforms that operate without approval. Fake lenders collect personal data, impose hidden charges, harass contacts and sometimes disappear after taking fees. The safest way to avoid these problems is to confirm if a lending platform is backed by a financial institution recognized by the Central Bank of Nigeria (CBN). Knowing how to verify approval can protect your money, data and peace of mind.

This guide explains practical steps to confirm whether a loan app or lending company is authorized to operate. Every borrower should understand what to look for before accepting any loan offer from a digital platform, website or agent.

Confirm the Company’s License Category

Every legal lender must operate under a license issued or recognized by the CBN. The most common categories include:

Microfinance banks (MFBs)
Finance companies
Commercial banks with digital lending features
Digital banks with CBN approval
Online platforms partnering with licensed lenders

If the loan platform does not fit into any of these groups, or its license status is unclear, it is likely unapproved.

Search the CBN Directory of Licensed Institutions

The CBN keeps a public list of approved financial institutions on its website. Borrowers can search based on the institution type. The categories usually seen include:

Approved Finance Companies
Licensed Microfinance Banks
Commercial Banks
Payment Service Banks
Mobile Money Operators

If the name of the company behind the loan app is not found, it is not licensed directly. Some fintechs use partnerships, so this step helps you verify the real institution behind the brand.

Verify With the FCCPC List of Authorized Digital Lenders

The Federal Competition and Consumer Protection Commission (FCCPC) monitors digital lenders alongside the CBN. Licensed loan apps are listed in the Limited Interim Regulatory Framework and Guidelines for Digital Lending. The FCCPC website regularly publishes:

Fully approved lenders
Conditionally approved lenders
Blacklisted or flagged platforms

Any loan app missing from both the CBN list and the FCCPC approved list is a risk.

Check the Company Registration With CAC

Every legal lender must be registered with the Corporate Affairs Commission (CAC). The CAC portal can confirm if the business name exists and the year it was registered. Look out for:

Registered company name
RC number
Current status
Nature of business

Unregistered businesses have no legal background and can easily vanish without accountability.

Read the About Section on the App or Website

A credible lender usually displays licensing information, company name and address. Look for these details:

Name of the parent company
Office address
License type
Registration number
Regulatory details

When a platform hides these details or only displays a fancy brand name, there is a high chance the company is operating without oversight.

Investigate Their Physical or Virtual Contact Channels

Approved lenders provide working contact points that can be traced. These may include:

Official email
Customer care lines
Physical office address
Website with real-time support

If the app lists only social media handles or fake contact numbers, do not trust it.

Check Interest Rate Transparency and Loan Terms

CBN-approved lenders present interest rates and repayment details clearly. Watch for:

Stated interest rate
Tenure
Penalties for late payment
Processing or service fees
Repayment date breakdown

Loan apps that give vague information or hide charges usually operate outside regulatory standards.

Review Their Privacy Policy and Data Practices

Legal platforms follow data protection rules and include a clear privacy policy. A proper privacy policy must explain:

What data is collected
How data is used
Data sharing rules
How long data is stored
Customer rights

Apps that demand contact lists, photos, bank passwords or social media access without explaining how the data will be used are not trustworthy.

Verify Their Debt Recovery Methods

Approved lenders follow ethical recovery procedures. Red flags include:

Threats during repayment
Messages to relatives
Use of defamatory language
Fake law enforcement claims
Public shaming on social media

Borrowers can submit evidence of harassment to the FCCPC and CBN. Any platform known for harassment is likely unlicensed or violating regulations.

Examine App Store Details

Loan apps hosted on Google Play Store or Apple App Store normally display ownership information. Check the following:

Developer or company name
Contact email
Official website link
Review patterns
Removal or reinstatement history

Apps frequently removed for policy violations often lack regulatory backing.

Look Out for Partnerships With Licensed Institutions

Some fintechs lend through partnerships with banks or microfinance institutions. In such cases, the app should mention the licensed partner. Examples:

“Powered by XYZ Microfinance Bank”
“In partnership with ABC Finance Company”

If no partnership is shown and the app does not appear on any regulatory list, borrowing from it carries serious risk.

Watch for Approval From the Digital Lending Compliance Framework

After clampdowns on loan sharks, the FCCPC launched a loan app compliance system. Platforms that submitted full documentation and passed verification are given approval categories. Borrowers should check:

If the app is listed as approved
If its license number is displayed
If complaints exist from recent users

This step helps you avoid apps that pretend to be regulated.

Compare User Reviews With Caution

Customer feedback reveals how a loan platform behaves. Check for signs like:

Hidden charges
Illegal deductions
Harassment
Poor communication
Fake promises
Defamation reports

A few complaints may not disqualify an app, but repeated reports show deeper problems.

Request Clarification Directly From Support

If unclear about license status, send an email or chat with the support team. Ask for:

License category
Registered company name
Partner institution (if any)
Verification link or document

If the response is evasive or no reply comes, take it as a warning sign.

Study Their Payment and Disbursement Channels

Licensed lenders use secure payment gateways, trusted bank accounts and transparent repayment instructions. Be careful with lenders that:

Ask for fees before approval
Use personal accounts for payments
Demand transfers outside official channels
Change repayment details without notice

Illegal platforms often use borrowed or private accounts that cannot be traced.

Confirm With Industry Associations

Some legal lenders register with trade associations. These bodies may include:

Fintech Association of Nigeria
Association of Nigeria
Microfinance Banks
Finance Houses Association

Membership alone does not equal CBN approval, but it boosts credibility when combined with licensing.

Report Suspicious Platforms When in Doubt

Borrowers who discover illegal apps should report them. Complaints can be made to:

CBN Consumer Protection Department
FCCPC complaint portal
EFCC (if fraud is involved)
• Police cybercrime units

Reporting protects others and helps regulators block harmful apps.

Why Verification Matters Before Borrowing

Borrowing from unapproved platforms can result in:

Data theft
Contact harassment
Excessive interest rates
Unlawful deductions
Lack of legal protection
Fake loan offers
Threats and blackmail
Exposure to cyber scams

When a lender is approved by the CBN, there is accountability. Your rights as a customer are protected and you have a complaint channel in case of disputes.