The Central Bank of Nigeria (CBN) has clarified the reported revocation of Bureau de Change (BDC) licences.
As previously reported, the necessary caution deposit of N200m for tier-1 BDC licence holders has been eliminated from Nigeria’s amended regulatory requirements for BDC operations.
Similarly, the N50 million for tier-2 licence holders has been withdrawn. The non-refundable annual licence renewal cost has been eliminated. Previously, tier-1 BDCs paid N5 million, while tier-2 BDCs paid N1 million for renewal.
The new standards establish two categories of BDCs: Tier 1 and Tier 2, with minimum capital requirements of N2 billion and N500 million, respectively. Furthermore, the bank fixed the application price for Tier-1 licences at N1 million and Tier-2 licences at N250 thousand.
Tier-1 and Tier-2 BDCs have licencing costs of N5 million and N2 million, respectively. Among other things, the new criteria restricted BDCs’ foreign currency holdings (Net Open Position, NOP) to 30% of shareholders’ assets unaffected by losses. It also restricted total borrowing to 50% of shareholders’ cash unaffected by losses.
The apex bank also requested that BDCS meet the standards of the Tier of licence they are looking for within the next six months.
The top bank clarified that the tier-based classification of Bureau De Change (BDCs) was based on an earlier exposure draft released for public input earlier this year, which the Bank has now incorporated and posted on its website on Wednesday, May 22, 2024.
Hakama Sidi Ali, interim director of the corporate communications department, told reporters in Abuja on Thursday, May 23, 2024, that the new guidelines include two levels of licencing.
She repeated the Bank’s offer to interested parties to apply for BDC licences, providing they fulfil the new rules, which will take effect on June 3, 2024, with existing BDCs having a six-month grace period to meet the new requirements.
Sidi Ali also stated that the CBN remains committed to repositioning the BDC sub-sector to play the envisioned role in Nigeria’s foreign exchange market.
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