...Orders closure of branches within 90 days
…Bans relationship with street currency hawkers
…To sanction BDCs operating outside registered office

The Central Bank of Nigeria, CBN has ordered  bureaux de change (BDCs)  to close  all branches within 90 days,  saying branch operations is no longer allowed in the subsector. This directive was contained in the  revised guidelines for BDCs released on Friday by the apex bank.  According to the guidelines, issued via a  circular titled: ‘Revised Operational Guidelines for Bureaux De Change in Nigeria’, “Bureau De Change is Licenced as a unit institution.

No Bureau De Change shall have a branch office outside its registered office.  All Bureaux De Change that under the 2002 Guidelines have branches are required to close such branches within 90 days of the 2015 guidelines.”

The CBN also banned BDCs from business relationship with street traders in foreign currencies. It stated: “Similarly, it shall be a ground for the revocation of Licence should any street trader in foreign currencies be found to have any business relationship with a Licenced BDC.

Application for licence

According to the circular, “A formal application to the CBN Governor to grant the promoters an Approval in Principle to carry on the business of a Bureau De Change in Nigeria (shall be made). The application should be addressed to the Director, Financial Policy and Regulation Department (FPRD), Central Bank of Nigeria. Applicants/promoters shall attach to their application the following documents:

A non-refundable application fee of N100, 000 or such other amount as may be determined by the Bank from time to time in bank draft payable to the Central Bank of Nigeria; Evidence of payment of the prescribed minimum capital of N35 million or any other amount as may be determined by the CBN from time to time, into the designated CBN account. The Bank shall refund this amount with interest after the proposed institution has obtained its final licence;

A copy of the draft Memorandum and Articles of Association; A letter of intent to subscribe to the shares of the proposed Bureau De Change signed by each subscriber; A copy of the list of the proposed shareholders in tabular form showing their business, and residential addresses and the names and addresses of their respective bankers, as well as the details of their Bank Verification Number (BVN).”

It further stated that, “Promoters shall reserve the proposed company’s name at the Corporate Affairs Commission (CAC) as no proposed Bureau De Change shall incorporate/register its name with the Corporate Affairs Commission until an approval-in-principle has been obtained from the CBN, a copy of which shall be presented to the Corporate Affairs Commission.”

Requirements for final licence

The circular further noted, “Not later than six months after the grant of AIP, the promoters of a proposed BDC shall submit application for the grant of a final licence to the Governor, Central Bank of Nigeria, Abuja, with the following documents: Evidence of payment of anon-refundable licencing fee of N1 million only or any other amount as may be determined by the CBN from time to time; the names, designations and signed Curricula Vitae (CV) of the proposed members of the top management; Evidence of incorporation of the company with CAC; evidence of payment of N35 million mandatory caution deposit, or any other amount as may be determined by the CBN from time to time, into a designated CBN account; evidence of having suitable office accommodation for the operation of the proposed BDC.”

Financial requirements

According to the circular, the financial requirements, which may vary at the discretion of the CBN, are as follows: “Minimum paid-up share capital-N35million; Non-refundable application fee-N100, 000; Non-refundable licensing fee-N1 million; Mandatory caution Deposit-N35 million; Non-refundable annual licensing renewal fee [payable not later than30 days after the end of each calendar year]-N250,000; Non-refundable change of name fee-N100, 000”

Operations of bureaux de change

On the operations of BDCs in Nigeria, the circular said: “Every BDC in Nigeria shall deal in bank notes and coins, plastic cards and such other businesses as the CBN may approve from time to time; The foreign currencies dealt in by a BDC shall be derived from private sources and such other sources which may include the CBN window as determined by the CBN from time to time for the purpose of funding Business Travel Allowance [BTA] and Personal Travel Allowance [PTA];

Any person/individual wishing to sell foreign currency above $10,000 or its equivalent to a BDC shall be required to disclose the source; Transactions shall be on spot basis (immediate settlement), adding “For the avoidance of doubt, forward transactions by BDCs are not allowed; The maximum amount per transaction for a BDC shall be determined from time to time by the CBN with respect to business and personal travel allowances.

The maximum amount currently for PTA and BTA per quarter is $4000 and $5000, respectively; All sales or purchases of foreign exchange shall be properly documented and recorded as may be required by the CBN. Such documents should be arranged sequentially and be made available to CBN and other regulatory authorities on demand, etc.”

Ground for licence revocation

The guidelines further stated: “Every BDC shall transact business at its registered office approved by the CBN as any BDC that operates outside its registered office shall be sanctioned. Similarly, it shall be a ground for the revocation of Licence should any street trader in foreign currencies be found to have any business relationship with a Licenced BDC. Every BDC shall fix its hours of business which shall be clearly displayed in its office.

Every BDC shall be required to open both domiciliary and Naira accounts with Authorized dealers in Nigeria and inform the CBN accordingly. The accounts shall be used solely for day to day operations.”

Non-permissible activities

According to the circular, non-permissible activities for BDCs include: “Engaging in off-shore business or maintaining foreign correspondence relationship; Engaging in any trade related import activities; Maintaining a foreign account in whatever form; Round-tripping of foreign exchange [currency] acquired through the CBN window; Street trading of foreign exchange; Carrying on capital market activities; Any other activity as may from time to time be termed “non-permissible” by the CBN.”

It also warned that “Bureau De Change is licenced as a unit institution” And as such, “no Bureau De Change shall have a branch office outside its registered office. All Bureaux De Change that under the 2002 Guidelines have branches are required to close such branches within 90 days of the 2015 guidelines.”

http://www.vanguardngr.com/2015/12/cbn-halts-branch-operations-by-bureaux-de-change/

Last Days Dollar-Must-Go bags for sale

A caution deposit of N35billion at near zero interest rate is too punitive for the operators. But I believe the objective of the FG here is to reduce the number of the BDC operators in the market.

Ever confused CBN.

So for dollar's negative effect to ease on us its not even 4 month. New #tag #dollarmustgo

Hmmmm....

CC: Lalasticlala please do the needful

From my perspective this makes usd/gbp very hard to get hence the naira keeps getting weaker, let the naira ride on normal laws of demand and supply, i noticed naira keeps getting devalued even with all the recent hard policies by the CBN

This will only worsen the dollar situation

Great

Now I don't seem to understand what the CBN is driving at with all this.. ..I hope they know what they're doing.. ..God save the economy.. ..

Emefiele...one week, one policy!

The CBN also banned BDCs from business relationship with street traders in foreign currencuies. It stated: “Similarly, it shall be a ground for the revocation of Licence should any street trader in foreign currencies be found to have any business relationship with a Licenced BDC.....How will this work when bank officials themselves do have their own mallams on speed dial to bring foreign currency into the banking hall for their customers who wants to do international transfer!

What?

This nonsense economic policies is what they call voodoo economics....

mployer:

Ever confused CBN.

Everything about buhari is confused

End time closing...

Experts wey una.

Ok...seen..!!!

Great economists of Nairaland ..I don't want to judge this directive as a novice...Please explain the Fundamental implications of this. What school of economics does this suits Is there any where in the world this has been put to test what was the outcome After these answers...We will be able to judge holistically

Na waooo

ff

I'm sure that before CBN takes the decision, the advantage over weigh the disadvantage. They wouldn't take decision that will affect the economy.

Emiefele is a confused man. I am patiently waiting for his sack


What difference does it make to close branches when the head office is still operational?

hmm

I don't know if it's a good step in the right direction,i just hope it is.

Oke nzuzu ajoka

Silly requirements to drastically reduce the spread between the Inter-bank and Parallel market rates!!

Will it work?? Nah!!!!!

Hmmm

Hyperregulating a fledgling economy.

This wasn't exactly how Dubai, Singapore and Korea emerged.

We need NOI back before this dullard kills off what is left of the ruins.

BUHARI IS AN ECONOMIC ASSASSIN....1984 IS HAPPENING ALL OVER AGAIN.

Leave dollars abeg, Na corruption we dey FIGHT now.

Hahahahahahahahahahahahahahaha!!!!