Apply For New Licences Now – CBN Tells BDC Operators

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  • Offers six-month grace period for compliance

BY COBHAM NSA – The Central Bank of Nigeria (CBN) has released new operational guidelines directing existing Bureau De Change (BDC) operators to reapply for new licenses with a six-month deadline to meet the new minimum capital requirements.

According to the apex bank, these new guidelines are part of reforms to re-position the BDC sub-sector to play its envisioned role in the foreign exchange market in Nigeria

Titled, “Regulatory and Supervisory Guidelines for BDC Operation in Nigeria”, the circular, meant for all BDC operators and stakeholders in the financial services industry, also introduces two categories of BDCs, Tier 1 and Tier 2, with minimum capital requirements of N2 billion and N500 million respectively.

The circular, issued on Wednesday by the CBN’s Director of Financial Policy and Regulation Department, Haruna Mustafa, stated thus; “All existing BDCs and promoters of proposed BDCs are to note the following: Re-apply for a new license according to any of the Tiers or license category of their choice as provided in the Guidelines”

Additionally, the CBN also made some changes to the guidelines of existing BDCs with one such change being the removal of the mandatory caution deposit of N200 million for tier-1 licence holders while the tier-2 licence holders will no longer have the mandatory N50 million caution deposit.

Similarly, the CBN also withdrew the non-refundable annual licence renewal fee of N5 million and N1 million for tier-1 and tier-2 BDCs, respectively.

The circular among other issues indicates that the new guidelines limit the foreign currency holdings of BDCs (Net Open Position, NOP) to 30 percent of shareholders’ funds unimpaired by losses while also limiting total borrowing to 50 percent of shareholders’ funds unimpaired by losses.

The circular stated in part; “As part of reforms to re-position the Bureau De Change (BDC) sub-sector to play its envisioned role in the foreign exchange market in Nigeria, the Central Bank of Nigeria (CBN) issued the Draft Operational Guidelines for BDC Operations in Nigeria in February 2024, for stakeholder comments/inputs.

“Following the conclusion of the stakeholder consultations and in the exercise of the powers conferred on it by Section 56 of the Banks and Other Financial Institutions Act (BOFIA) 2020, the CBN hereby issues the attached Regulatory and Supervisory Guidelines for Bureau De Change Operations in Nigeria 2024 for compliance by all operators and promoters of proposed BDCs in Nigeria.

“The Guidelines, amongst others, introduce new licensing requirements and categories of BDCs as well as revise the permissible activities, financial requirements, corporate governance requirements, and AMUCFT/CPF provisions for BDCs.

“All existing BDCs shall; Re-apply for a new license according to any of the Tiers or license category of their choice as provided in the Guidelines;

“Meet the minimum capital requirements for the license category applied for within six (6) months from the effective date of the Guidelines.”

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