CBN Gives BDCs December Deadline To Meet New Capital Requirements
Directs existing BDCs to reapply for new license
…Promoters of proposed BDCs can also apply
By People’s Voice Nigeria | News
The Central Bank of Nigeria (CBN) has announced that all applicants for the new Bureaux De Change (BDC) license category of their choice, as provided in the regulatory and supervisory guidelines for BDC operations in the country, the draft of which it first unveiled in February this year, must meet the stipulated minimum capital requirements and conditions by December 3 this year.
In a circular posted on its website on Wednesday, which announced its approval of the guidelines, the apex bank directed existing BDCs to reapply for a new license according to any of the tiers or license categories of their choice as provided in the new regulatory and supervisory guidelines.
It also stated that promoters of proposed BDCs can also apply for a license according to any of the new tiers or license categories of their choice.
Specifically, the regulator said that all applicants for new BDC licenses are required to meet the minimum capital requirements and conditions for the license category applied for within six months of the effective date of the guidelines June 3, 2024.
Under the approved guidelines, there will be two categories of BDC licence- Tier 1 BDC Licence and Tier 2 BDC license.
For the former, the guidelines stated that such BDCs: “May operate in any State of the Federation and the Federal Capital Territory (FCT); may establish branches and appoint franchisees in any State and FCT, subject to the written approval of the CBN; shall maintain a minimum distance of one (1) kilometre between its branches, its branch and a franchisee, and between its franchisees (and) shall exercise oversight on its franchisees.”
It added that: “All franchisees shall adopt their franchisor’s name, logo, branding, technology platform and regulatory rendition requirements.”
For the latter(Tier 2 BDCs), the guidelines state that they are: “Permitted to operate only in one State of the Federation or the FCT; allowed to establish five (5) branches in a State of operation, subject to the written approval of the CBN; required to maintain a minimum distance of one (1) kilometre between its branches (and) not allowed to appoint franchisees.”
The guidelines also show that the CBN has approved an increase in the share capital of BDCs from N35 million for a general license to N2 billion and N500 million for Tier 1 and Tier 2 licenses respectively.
Under the approved guidelines, the application and license fee for Tier 1 BDC Licence is N1 million and N5 million respectively while for Tier 2 BDC Licence category, the application and license fee are N250,000 and N2 million respectively.
According to the guidelines, the application for a BDC licence will be processed in two stages, namely: Approval-in[1]Principle (AIP) and final licence.
The approved guidelines also state that for operations of BDCs, all transactions by residents must only commence, “ after electronic retrieval of the potential customer’s BVN or Tax Identification Number (TIN) from the NIBSS or FIRS databases, respectively, and the details confirmed to match with the potential customer’s standard identification document.”
Another highlight of the approved guidelines with regard to the operations of BDCs is that: “All transactions by non-residents shall only commence after obtaining a copy of the potential customer’s passport identification document and validation with the relevant Nigerian agency.”
For foreign currency cash purchases, the guidelines state that: “Sellers of USD10,000 and above shall be required to declare the source of the foreign exchange (and) for all customer-present transactions, all the naira proceeds shall be electronically credited or transferred to the same customer’s naira account or prepaid card.”
Other highlights of the new guidelines include: barring BDCs from futures, options and derivatives trading; banning them from carrying out outward international transfers, receiving international inward transfers and dealing on crypto assets or entities that deal on crypto assets and others.
