Business
By Benprince Ezeh
THE Central Bank of Nigeria, CBN, has unveiled guidelines for licensing and regulation of payments system holding companies, PSHC, saying that companies must exist as non-operating entities in the ecosystem.
The CBN also prevented them from engaging in any transaction or maintaining any business relationship with any of its subsidiaries, except such transaction or business relationship is at arm’s length.
The circular, which was published by CBN on August 3, on the bank’s website was signed by Musa Jimoh, CBN director, Payment System Management Department.
Stating that “The framework is sequel to a recent approval of new licence categorisations for participants in the Nigerian payments system”, the CBN said: “The new payments system regulation earlier released by the bank had required companies desirous to operate more than one licence category to set up a PSHC with the activities of subsidiaries clearly delineated.”
The bank mandated a PSHC to have a minimum paid-up capital which shall exceed the sum of the minimum regulatory capital and total equity of all its subsidiaries as may be prescribed from time to time by the CBN.
It stated that if “PSHC owns less than 100 percent of the subsidiaries, its minimum paid-up capital shall exceed the summation of its proportionate holding in the subsidiaries. Excess capital in one subsidiary shall not be used to make up a shortfall in another subsidiary,” adding that “it is the capital of the PSHC that is rather applied to the subsidiaries.”
“PSHC’s total exposure on contingent liabilities on behalf of its subsidiaries shall not exceed 20 per cent of the payments service holding company’s shareholders’ funds unimpaired by losses,” the guideline stated.
It prevented a PSHC from paying dividends on its shares except its operational, preliminary, and organisational expenses, losses incurred and other capitalised expenses, not represented by tangible assets (excluding goodwill), have been completely written-off.
It pointed out that the arrangement would prevent commingling of activities, facilitate management of risks and enable the bank exercise adequate regulatory oversight on all the companies operating in the group.
Realnews reports that the affected regulated payments activities include mobile money operations, switching and processing, and payment solution services, and any other activity as may be approved by the CBN.
“Approval in principle for them is not an authority for the PSHC promoters to commence operations or perform any of the activities highlighted in the document,” CBN said, adding that it shall issue a PSHC license where it is satisfied with the promoters’ status of compliance with the conditions stated.
“In a situation, PSHC loses control of any of the two payments services subsidiaries – switching and processing company or mobile money operator in the group, for a period exceeding six consecutive months, the PSHC shall cease to be a PSHC and will be required to return its licence to the Central Bank of Nigeria for cancellation,” the guideline said.
“PSHC with only two subsidiaries, loses its controlling interest in either of the subsidiaries for a period exceeding six consecutive months, the PSHC shall cease to be a PSHC and will be required to return its licence to CBN for cancellation,” the guideline stated.
– Aug. 05, 2021 @ 15:14 GMT |
Tags: Central Bank of Nigeria PSHC
