Following representations from stakeholders, the Central Bank of Nigeria has extended to July 15, the deadline given to operators of Bureau De Change to comply with its new operational guidelines
| By Chinwe Okafor | Jul. 21, 2014 @ 01:00 GMT
THE Central Bank of Nigeria has extended the deadline given to operators of Bureau De Change, BDC, to meet the new requirements for their operation from July 15 to July 31. In a circular issued to the BDC operators, the apex bank said the guidelines had been modified. According to the modification, interests will now be paid on the mandatory cautionary deposit of N35 million based on the banking industry savings account rate. The CBN said the new decision was reached following representations made by all stakeholders to it.
A statement from the bank said further to its circular ref: FPRD/DIR/GEN/CIR/01/009 of June 23, 2014 on new requirements for the operation of Bureau De Change in Nigeria and based on representations from stakeholders, the deadline for compliance with the new licensing requirements has been extended to July 31, 2014. “Interest will be paid on the mandatory cautionary deposit of N35m, based on the banking industry savings account rate. The CBN, on the expiration of the deadline of July 31, 2014, will cease to fund any Bureau De Change that fails to comply with the new requirements. Only Bureaux De Change that meet the new requirements will qualify to be engaged as agents by the licensed International Money Transfer Operators for inward and outward money transfer business in Nigeria.”
The circular also stated that all the BDCs that paid the mandatory caution deposit of N500, 000 to the CBN prior to 2009, should apply for their refund. Meanwhile, the CBN had, on June 23, reviewed the guidelines to check the persistent depletion in the country’s external reserves. The bank explained that while the BDCs were licensed to provide access to foreign exchange to small-scale end users and assist in the fight against illegal financial activities, it had observed a weak and ineffective operational structure which made the sector to abandon the objectives for its establishment.
Other deficiencies observed in their operations were the depletion of the country’s foreign reserves which was the result of the unusually large number of the BDCs; potential financing of unauthorised transactions with foreign exchange procured from the CBN window, and gradual dollarisation of the Nigerian economy with adverse effect on monetary policy. It also listed inadequate minimum in paid-up capital, prevailing ownership of several BDCs by same promoters in order to buy foreign exchange multiple times from the CBN window as well as their huge interest in widening margins and profits from the foreign exchange market as some of the deficiencies in the system.
According to the CBN, its expectation is to have BDCs that are properly structured, effectively regulated, and well capitalised to meet the objectives for which operators are licensed. It said the new requirement would aim at correcting such deficiencies in the operations of the BDCs.