Minimum paid-up capital requirement for BDCs raised from N10 million to N35 million.
The Central Bank of Nigeria, CBN, on Monday issued fresh guidelines to Bureau de Change, BDCs operators on ownership and requirements for licensing.
The Bank also authorized Western Union, Moneygram and RIA Financial Services to handle inward and outward money transfer services in Nigeria.
The authority to the three international money transfer agencies, the CBN said, was part of regulatory steps adopted to curb observed deficiencies, which culminated in gross inefficiencies and sharp practices in the country’s foreign exchange market.
It explained that the new “Guidelines for International Money Transfer Services in Nigeria” were in line with the provisions of the Foreign Exchange (Monitoring and Miscellaneous Provisions) Act 17 of 1995 and the Banks and Other Financial Institutions Act, BOFIA of 1991, which empowered it to license and regulate BDC operations in the country to achieve set objectives.
But, the CBN said it had observed with grave concern the deficiencies in the operational effectiveness of BDCs, which showed gross violation of these objectives, particularly the activities of operators only interested in profiteering from the foreign exchange market, regardless of prevailing official and interbank rates.
The abuses, the banking industry regulator said, have also resulted in weak and ineffective operational structures in defiance of established objectives, reckless depletion of the country’s foreign reserves, and large-scale financing of unauthorised transactions with foreign exchange procured from the Central Bank.
The CBN also frowned at the practice where dollar was being used in local transactions in the country, a development that has negatively impacted the conduct of monetary policy and undermined the cashless policy initiative.
It condemned the practice where some operators owned several BDCs with the sole aim of buying foreign exchange multiple times from the CBN window for profiteering purposes.
The CBN traced the root of the problem to the absence of a properly structured system of operations by the BDCs, and the lack of an effectively regulated, and well-capitalised agencies with the capacity to effectively perform the roles they were licensed to achieve in the economy.
Despite the upward review of the capital requirements of all other CBN-regulated entities over the years, the CBN said the required minimum paid-up capital of BDCs had remained at N10 million.
Consequently, it said the minimum capital requirement for the operation of BDCs in Nigeria has been reviewed to N35 million, in addition to a mandatory cautionary deposit.
The guidelines said the cautionary deposit shall be put in a non-interest yielding account in the CBN upon the grant of Approval-in-Principle, with the licensing of BDCs henceforth attracting an application fees N100,000, licensing fee (N1 million), and annual renewal fee (N250,000).
The new guideline, which forbids ownership of multiple BDCs, stipulates stiff penalties for violators when detected.
All existing BDCs and those currently operating with a Final Approval Letter are required to comply with the requirement on mandatory cautionary deposit by July 15 while all current applications are expected to comply with these new requirements.
According to the new guidelines, the compulsory membership of the Association of Bureau De Change Operators of Nigeria, ABCON, was no longer a requirement for the licensing of BDCs.