The Bank of Industry (BOI) has received approval from the Central Bank of Nigeria (CBN) to operate a non-interest banking window, a move that broadens the development lender’s funding toolkit and opens a new channel of credit to businesses that avoid conventional interest-based financing.
The approval allows BoI to commence non-interest banking operations, positioning the state-owned lender to mobilise ethical funding and extend asset-backed financing to underserved parts of the economy, including micro, small and medium-sized enterprises (MSMEs).
The move aligns with Nigeria’s wider push to deepen financial inclusion and diversify funding sources for the real sector amid tight credit conditions.
Non-interest banking, which complies with islamic finance principles and other ethical frameworks, prohibits interest payments and instead relies on structures tied to tangible assets and shared risk.
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Under the new window, BoI said it will be able to finance assets and raw materials for customers using approved non-interest products, expanding the range of financing options available to manufacturers, agribusinesses and other productive sectors.
The approval “marks a significant milestone in the Bank’s growth and long-term development agenda,” BoI said in a statement at the weekend. It added that this landmark move reflects the regulator’s confidence in the institution’s approach to responsible and developmental financing.
The lender said the new window would enable it to scale operations, introduce innovative products and deepen support for segments critical to sustainable economic growth.
Announcing the approval, Olasupo Olusi, BoI managing director and chief executive officer described the licence as a turning point in the institution’s evolution. “This licence marks a pivotal moment in the bank’s journey of transforming Nigeria’s industrial sector,” Olusi said. “With this licence we can reach a new category of borrowers who before now could not be served.”
Nigeria has one of Africa’s largest non-interest finance markets, driven mainly by sovereign sukuk issuances and a small but growing number of non-interest banks and fund managers.
Demand for such products has been fuelled by faith-based investors, ethical finance advocates and growing interest in asset-backed instruments amid volatile global markets. Sovereign sukuk issued by the federal government have been heavily oversubscribed in recent years, underscoring appetite for the structures.
By entering the space, BoI aims to tap those pools of capital while expanding access to credit for businesses that have historically stayed outside the formal banking system because of religious or ethical considerations.
The bank said the initiative would enable “ethically motivated and faith-sensitive enterprises” to access financing and participate more confidently in the formal economy.
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Beyond inclusion, non-interest structures are also seen as a way to better align financing with productive activity, since funds are typically tied to identifiable assets or projects rather than disbursed as cash.
BoI said the window would allow it to further align its financing activities with social and developmental objectives, reinforcing its mandate as a development finance institution.
Established in 1959 as the Investment Company of Nigeria and later reconstituted as the Nigerian Industrial Development Bank, BoI assumed its current form in 2001 following a merger with the Nigerian Bank for Commerce and Industry and the National Economic Reconstruction Fund.
The bank’s mandate is to provide long-term financing for large, medium, small-scale and micro projects, often stepping in where commercial banks are unwilling or unable to lend.
In recent years, BoI has played a critical role in government efforts to channel credit to priority sectors, including manufacturing, agriculture and small businesses.
The introduction of a non-interest banking window adds another lever as policymakers seek to crowd in private capital and support job creation without increasing fiscal strain.
BoI said the new window would support inclusive growth by mobilising ethical funding and expanding support for the real economy.