The Central Bank of Nigeria (CBN) will be extending the recapitalisation deadline for Bureau De Change (BDC) operators from December 3, 2024 to June 3, 2025.
The Association of Bureaux De Change of Nigeria (ABCON) President, Alhaji Aminu Gwadabe, broke the news yesterday during an emergency virtual general meeting organised by ABCON for its members.
He said the apex bank decided to extend the deadline by six months following low level of compliance in raising new capital by BDC operators.
The operators in attendance include over 220 CBN-licenced BDCs, ABCON Council members, and other stakeholders the meeting aligns with the group’s continuous engagements with the CBN to ensure seamless recapitalisation process.
He said, “The CBN is willing to partner with BDCs to ensure that the recapitalisation process is seamless. We are sending a message of unity, collaboration and opportunities to ABCON members to continue to strive to ensure they meet the new capital requirements. We thank the CBN for listening and giving us six-month extension.”
He said the deadline applies to existing BDCs while new operators seeking licence have indefinite timeline to get their licences.
“I want us to brace up and see the opportunities in the recapitalisation, which are immeasurable,” Gwadabe said.
The ABCON boss said that CBN regulation empowers BDCs to acquire foreign currency from diverse sources, sell foreign exchange , open foreign currency and naira accounts with commercial or non-interest banks as well as collaborate with its bankers to issue prepaid debit cards.
The new CBN guidelines for the sector also requires all Tier-1 BDCs to raise N2 billion minimum capital to remain in business, while Tier-2 BDCs are to raise N500 million minimum capital. The Tier-1 BDCs will operate nationally, while the Tier-2 BDCs can only operate in one state within the Federation.
The capital raising exercise was part of reforms to re-position the BDC sub-sector to play its envisioned role in the foreign exchange market in Nigeria.
The CBN issued the guideline after the conclusion of stakeholder consultations and in exercise of the powers conferred on it by Section 56 of the Banks and Other Financial Institutions Act (BOFIA) 2020.
The guidelines, amongst others, introduces new licensing requirements and categories of BDCs as well as revises the permissible activities, financial requirements, corporate governance requirements and AML/CFT/CPF provisions for BDCs.
According to the new guideline, Tier-1 BDC 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 and shall maintain a minimum distance of one kilometre between its branches, its branch and a franchisee, and between its franchisees.
It is permitted to exercise oversight on its franchisees, with all franchisees allowed to adopt their franchisor’s name, logo, branding, technology platform and regulatory rendition requirements.
By the new rule, Tier 2 BDC Licence is permitted to operate only in one State of the Federation or the FCT; allowed to establish five branches in a State of operation, subject to the written approval of the CBN and required to maintain a minimum distance of one kilometre between its branches but is not allowed to appoint franchisees.
The new rule stops commercial, merchant, non-interest and payment service banks., financial holding companies, other Financial Institutions (OFIs), including International Money Transfer Operators and payment service providers, serving staff of financial services regulatory and supervisory agencies and serving staff of regulated financial services providers, among others from owning BDC license.
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