The Central Bank of Nigeria (CBN) on Monday jerked up the minimum capital requirement
for bureaux de change (BDC) operation in Nigeria from N10 million to N35 million, in a new rule to weed out unserious elements in that sub-sector and correct some grave inefficiencies
and sharp practices.
The new guidelines further stipulate a mandatory cautionary deposit reviewed to N35 million
which is expected to be deposited in a non-interest yielding account in the CBN upon the grant of an approval- in-principle.
The CBN said it expects all existing BDCs and those currently operating with a final approval letter to comply with the new requirement on mandatory cautionary deposit by July 15, 2014, while urging all current applications to comply with these new requirements.
The CBN said apart from the fact that the present N10 million minimum capital requirement was no longer adequate, it had also observed some deficiencies in the operational effectiveness
of BDCs which had led to gross inefficiencies and sharp practices in the foreign exchange market.
It said the new requirement was therefore to ensure that only genuine and more serious companies are allowed to operate in the sector, going forward.
The new rules, though not expressly stated, also indicate that the CBN may have literally disbanded the BDC classes introduced by the former governor, Sanusi Lamido Sanusi, meaning that all BDCs are now to operate at the same level.
In the new set of guidelines contained in a statement on Monday, the CBN noted that going forward, application for a BDC licence would attract a fee of N100,000, licensing fee of N1 million and an annual renewal fee of N250,000.
The apex bank further warned that ownership of multiple BDCs was no longer permissible and would attract sanctions if detected.
Meanwhile, the compulsory membership of the Association of Bureaux De Change Operators of Nigeria (ABCON) is no longer a requirement
for the licensing of BDCs in the new era.
The CBNlicenses and regulates BDC operations in Nigeria to provide access to foreign exchange to small-scale end users; provide a tool for the management of exchange rate, assist in the fight against illegal financial activities as well as provide economic data for policy decisions.
In the statement signed by Isaac Okorafor on behalf of its director, corporate communications, the CBN raised the concern that rather than help achieve these set objectives, the BDC sector now operate in a manner that is counter to the goals.
The CBN said specifically that it had noticed an avalanche of rent-seeking operators who were only interested in widening margins and profits from the foreign exchange market, regardless of prevailing official and inter-bank rates.
It further noted a prevalent weak and ineffective operational structure, resulting in the sub-sector completely abandoning the objectives for its establishment.
The CBN also raised the concern that some of the operators were using foreign exchange purchased from its window to fund unauthorised transactions, noting meanwhile, that the unusually large number of BDCs in the country was contributing to the depletion of country’s foreign reserves.
