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BDC operators demand extension of recapitalisation deadline

By on July 25, 2014

The Association of Bureau de Change Operators of Nigeria (ABCON) has proposed a 40 week time table for operators in the sub-sector to meet the N35 million new minimum capital requirements.

The Central Bank of Nigeria (CBN) recently raised the minimum capital requirement of BDCs to N35 million, up from N10. It had also raised the mandatory caution deposit to N35 million.

However, in response to complaints from operators and some other stakeholders, the regulator had extended the recapitalisation deadline from July 15 to July 31.

But speaking to newsmen, ABCON President, Alhaji Aminu Gwadabe said that the association has proposed a 40 week timetable for BDCs to meet the new minimum requirement, adding that the proposal has been sent to the CBN Governor for consideration.

According to him, although the central bank has extended the deadline to July 31, the time is still too short for operators to comply with the statutory and legal requirements of the new policy.

Furthermore, he pointed out that proposal sent by the association contains actions needed to be taken to enhance the successful implementation of the policy for the sub-sector.

“The timetable starts with sensitisation seminars to educate members on various options to consider in meeting the minimum capital requirement. We plan to hold these seminars in each geopolitical zone of the federation.

“Moreover, we would assist members scout for consultants to guide them on issues of valuation of existing companies in order to accommodate new members and or achieve harmonious merger.

“This is in line with what the CBN did for banks during the recapitalisation exercise of 2004,” Gwadabe.

He said the association has also appealed to the CBN to take a critical look at the minimum capital requirement of N35 million and the requirement of N35 million as cautionary deposit, saying it implies that the apex bank has raised the minimum capital base of BDCs to N70 million.

Gwadabe added: “Consequently, we have appealed to the CBN Governor to allow the minimum capital  base to be at N35 million and the caution deposit at N5 million so as to source the caution deposit  from the capital base of the company and the balance of N30 million be used as working capital of the BDCs.

“We have also appealed to the CBN to consider paying treasury bills interest rates on caution deposit to the BDCs, and because of volatility of the rate, an annual average rate could be used when crediting the interest due on the caution deposits.

“Also, in cognisance of the fact that all BDCs may not be able to either secure merging partners, source for new investors and or raise money internally to meet the capital require, we have recommended that CBN allow BDCs with N10 million capital to continue to exist but may be denied access to the weekly CBN dollar sales,” he further suggested.

 

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