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More BDCs scale recapitalisation hurdle

By on September 10, 2014

The number of licenced bureau de change (BDC) operators that have so far complied with the Central Bank of Nigeria’s (CBN’s) new capital requirements has increased to 2,493.
This represents an increase by 51, compared with a total of 2442 that was published by the banking sector regulator last month.

According to a list published on the central bank’s website at the weekend, the 2493 BDC firms had complied with its new capital requirements as at July 31, 2014.

This means that operating licences of about 766 firms had been revoked by the central bank. There were 3,208 registered BDCs in operation in the country, prior to the expiration of the deadline in July.

In June, the CBN had announced a new minimum capital requirement of N35 million for the operation of BDCs in the country, up from the N10 million it was previously. In order to ensure that forex dealers complied with the new capital requirements, the CBN had then extended the deadline to July 31, 2014.
The CBN had also stated that interest would now be paid on the mandatory cautionary deposit of N35 million, based on banking industry savings account rate. It among other requirements, also reviewed the mandatory cautionary deposit for BDCs upward to N35 million.

The regulator had pointed out that on the expiration of the deadline on July 31, 2014, that it would cease to fund any BDC that failed to comply with the new requirements. It emphasised that “only BDCs that meet the new requirements would qualify to be engaged as agent by the licenced international money transfer operators for inward and outward transfer business in Nigeria.”

The central bank had pointed out that it expects the emergence of well-capitalised and structured entities that can effectively perform the roles of BDCs in the economy as well as partnership between BDCs and renowned companies engaged in inward and outward money transfer in Nigeria.
It was in expectation of this collaboration that the CBN launched an outbound remittance service in the country.

The service allows Western Union, Moneygram and RIA Financial Services to carry out inward and outward money transfer services in Nigeria.

Furthermore, the CBN said it expects the creation of robust and sustainable business franchises that are not dependent on rent-seeking activities, but are properly situated to compete in the forex market, deliver superior values and returns.

 

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