CBN changes rules for Bureau De Change

The Central Bank of Nigeria (CBN) has announced an increase in the minimum capital requirement for Bureau de Change (BDC) operators from N10 million to N35 million.

In a statement, the CBN said the modification was made in order to ensure that only genuine companies operate as BDCs in Nigeria, in order to address the deficiencies in their operations.

“The mandatory cautionary deposit is reviewed to N35 million and shall be deposited in a non-interest yielding account with the CBN upon the grant of Approval-in-Principle,” the statement read.

New fees were approved for licensing of BDCs. While application fee is now N100,000, licensing fee is N1 million and annual renewal fee N250,000.

Ownership of multiple BDCs is not permissible and is punishable if 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, 2014 and all new applications are expected to comply with the new requirements,” CBN added.

In a twist, the apex bank also announced that compulsory membership of the Association of Bureau De Change Operators of Nigeria (ABCON) is no longer a requirement for licensing of BDCs.

Explaining the new directive, it explained that deficiencies in the operations of BDC had brought about sharp practices in the foreign exchange market.

A CBN spokesman, Mr. Isaac Okoronkwo, said the bank had taken steps to check the growing incidence of rent-seeking, depletion of external reserves, financing of unauthorised transactions and dollarisation, among others.

He further stated that the objectives would provide foreign exchange access to small-scale end-users, as well as serve as tools for the management of exchange rate, among others.

He said the avalanche of rent-seeking operators who were only interested in widening margins and profits from the foreign exchange market, regardless of prevailing official and interbank rates.

He stated that the CBN expectation was to have BDCs that would be properly structured, effectively regulated and well-capitalised to meet the objectives for which operators were licensed for.

“In particular, the CBN envisages the emergence of well-capitalised and structured entities that can effectively perform the roles of Bureau De Change in the economy,” he said.

Okoroafor stated that under the Guidelines, Western Union, Moneygram and RIA Financial Services had been authorised to carry out inward and outward money transfer services in Nigeria.

This, he added, would facilitate the creation of robust and sustainable business franchises that would not be dependent on rent-seeking activities.

He said it would be properly situated to compete in the foreign exchange market and deliver superior values and returns.