CBN Restricts Commercial Banks, Others From Owning BDCs, Increases License Fee
In a bid to stabilize the value of the naira exchange rate, the Central Bank of Nigeria (CBN) issued a draft revised regulatory and supervisory guidelines for Bureau De Change (BDC) operators in the country.
In the new regulatory guideline, the Apex bank announced the exclusion of governments, commercial banks, merchant banks, Other Financial Institutions (OFIs), public officers, and other entities from directly or indirectly owning Bureau De Change (BDCs).
The CBN noted that no person is permitted to carry on the business of BDC in Nigeria without its authorization. Also, the bank announced the increment of license fee to a minimum capital requirement of N2billion for Tier-1 firms in the sub-sector. Tier-2 BDCs are expected to have N500 million as minimum capital requirement.
This regulatory guidelines comes after the CBN on Fridat advised the Nigeria Customs Service (NCS) and other related parties to adopt the closing foreign exchange (FX) rate on the date of opening Form M for the importation of goods for import duty assessment going forward.
Section 2.0 of the guidelines states:
”The following shall not be allowed to participate in the ownership of BDCs, directly
or indirectly: Commercial, merchant, non-interest and payment service banks, OFIs, including holding companies and payment service providers, serving staff of financial services regulatory and supervisory agencies;
“Serving staff of regulated financial services providers, Governments at all levels, public officers as defined in 5th Schedule Part IV of the Constitution of the Federal Republic of Nigeria.
“Non-Governmental organizations, cooperative societies, charitable organizations, academic and religious institutions, non-Nigerian non-resident natural persons, non-Nigerian resident natural persons, non-resident non-regulated companies, telecommunication services providers. Sanctioned individuals and entities, a shareholder in another BDC (whether directly or indirectly), any other entity that the CBN may from time to time designate.”
The regulation, however, barred BDCs from engaging in street-trading, maintaining any type of account for any member of the public, including accepting any asset for safe keeping/custody; taking deposits from or granting loans to members of the public in any currency and in any form; retail sale of foreign currencies to non-individuals, except for BTA; international outward transfers; engaging in
off-shore business or maintaining foreign correspondent relationship with any foreign establishment; and opening or maintaining any account with any bank or financial institution outside Nigeria among others.
It further barred the BDCs from borrowing sums which in aggregate exceed the equivalent of 30 percent of its shareholders’ funds unimpaired by losses, in the BDC’s audited financial statements of the preceding year. The draft regulation further stipulated that sellers of the equivalent of $10,000 and above to a BDC were required to declare the source of the foreign exchange and comply with all AML/CFT/CPF regulations and foreign exchange laws and regulations going forward.
