The Association of Bureaux De Change Operators of Nigeria (ABCON) has kicked against the amendments to the new requirements for BDC operations, saying it was an indirect attempt to empower few operators in the sub-sector and consequently force many of the BDC operators into liquidation.
Last week, the Central Bank of Nigeria (CBN) amended the new requirements for BDC operations announced on June 23, 2014 ,extending the deadline for compliance to July 31, while the mandatory caution deposit of N35 million would now attract interest at savings account rate.
President ABCON, Alhaji Aminu Gwadabe, who commended the amendments contended that the amendments were far from the recommendations made by the association during a meeting the CBN governor had with its executive council on July 1.
“We recommended that the new minimum capital base be reduced to N15 million, while deadline for compliance should not be less than one year as it is the tradition of the CBN in any recapitalisation exercise. We also recommended that the mandatory caution deposit should be eliminated as there is no justification for such deposit. BDCs are not deposit taking organisations, we operate on cash and carry basis. We pay for CBN dollars two days in advance. So there is no need for such deposits,” Gwadabe said.
He said that ABCON also rejected the decision of the apex bank to limit the weekly dollar sale to BDCs that meet the new requirements by July 31, saying it will bring back the activities of black market and incidence of fake currency in circulation, which the BDCs were able to abolished as result of their involvement as monetary tool of the CBN in 2006 during the tenure of the former CBN governor.
According to Gwadabe, the policy will give “the banks the opportunity to hijack the weekly dollar sales to BDCs. Before CBN started selling dollars to BDCs in 2006, banks were not interested in BDC business. But as soon as the dollar sale started, they saw it as an avenue to make cheap profit, and pressurized the CBN to categorized the sub-sector into Class “A” and Class “B” BDCs. The minimum capital requirement for Class “A” BDCs, mostly owned by banks and money bags, was set at N500 million, and they were allowed to buy $1 million per week, while Class “B” BDCs with N10 million minimum capital requirement, were allowed to buy just $50,000 per week. That was how the CBN allowed the banks and money bags to hijack the dollar sales to BDCs in 2009.
“This, we believe is what will happen once the CBN limits dollar sales to BDCs that meet the N35 million minimum capital requirement, and mandatory caution deposit. it is an indirect way of handing over the weekly dollar sales to banks and money bags, who had no interest in BDC business until CBN started selling dollars to BDCs. The saving interest rate on caution deposit should also be reviewed to reflect market reality as the chunk of deposits to be realized by the CBN would be placed in treasury bills that attracts between 9 to 10 percent per annum presently” he stated.
