The Central Bank of Nigeria in a bid to check the persistent depletion in the country’s external reserves on Monday released fresh guidelines for Bureau De Change operators which raised the share capital of BDCs to N35m.
The development was confirmed by a statement issued by the apex bank signed by the Mr Isaac Okoroafor on behalf of the Director, Corporate Communications Department.
It said the new guidelines would also help the bank check the financing of unauthorized transactions as well as the dollarisation of the Nigerian economy.
In the statement, the apex bank gave all BDC operators in the country till July 15 to raise their capital from the current N10m to N35m, adding that the amount must be deposited in a non-interest yielding account in the CBN subject to a grant of approval-in-principle.
Apart from the N35m, the statement said that all BDCs applying for the new license would be expected to make an application fee of N100,000, licensing fee of N1m and an annual renewal fee of N250,000.
It also stated that unlike in the past, multiple ownership of BDC would not be permitted adding that anyone found having more than one BDC would be severely punished.
The statement said, “In order to ensure that only genuine companies operate as BDCs in Nigeria, the CBN makes the following modifications to the BDC guidelines.
“The minimum actual requirement for the operation of BDCs in Nigeria is reviewed to N35m.
“The mandatory cautionary deposit is reviewed to N35m and shall be deposited in a non interest yielding account in the CBN upon the grant of Approval-in-Principle.
“The following fees shall apply to the licensing of BDCs; application fee-N100,000; licensing fee N1m; and annual renewal fee-N250,000.
“Ownership of multiple BDCs is not permissible and would be punished if detected.
“All existing BDCs and those currently operating with a final approval letter are required to comply with the requirement on mandatory cautionary deposit by July 15, 2014 while all current applications are expected to comply with these new requirement.
”The statement stated further that the compulsory membership of Association of Bureau De Change Operators of Nigeria would no longer become a requirement for licensing of BDCs.
It explained that while the BDCs were licensed to provide access to foreign exchange to small scale end uses and assist in the fight against illegal financial activities, the apex bank had observed weak and ineffective operational structure which had made the sector to abandon the objectives for its establishment.
Other deficiencies observed in their operations are depletion of the country’s foreign reserves, in view of the unusually large number of BDCs; potential financing of unauthorized transactions with foreign exchange procured from the CBN window, and gradual dollarisation of the Nigerian economy with adverse effect on monetary policy.
It also listed inadequate minimums in paid-up capital, prevailing ownership of several BDCs by same promoters in order to buy foreign exchange multiple times from the CBN window as well as their huge interest in widening margins and profits from the foreign exchange market as some of the deficiencies on the system.
The statement noted that going forward, the expected role of BDCs following their recapitalization would be to deliver superior values and returns to the foreign exchange market.
“The CBN’s expectation is to have BDCc that are properly structured, effectively regulated, and well capitalized to meet the objectives which operators are licensed.
“In particular, the CBN envisages partnership between BDCs and renowned companies engaged in inward and outward money transfers in Nigeria, creation of robust and sustainable business franchises that are not dependent on rent seeking activities but are properly situated to compete in foreign exchange market,”It said