CBN to Raise Minimum Capital for Bureau De Change Operators to N2 billion

The Central Bank of Nigeria (CBN) is considering raising the minimum capital requirements for Bureau De Change (BDC) operators to N2 billion for Tier 1 licenses and N500 million for Tier 2 licenses.

It was previously N35 million for a general license.

The revised regulations in a February 23 circular seen by MoneyCentral was addressed to all BDC operators and stakeholders in the financial services industry. It encompasses numerous modifications to the guidelines governing BDC activities within the nation.

Once approved, these updated guidelines will come into effect on a date determined by the CBN.

According to the new guidelines, Tier 1 operators must maintain a minimum share capital of N2 billion and also submit a Mandatory Caution Deposit of N200 million. The non-refundable application fee is N1 million, while the license fee amounts to N5 million.

In Tier 2, operators are required to possess a minimum share capital of N500 million and maintain a Mandatory Caution Deposit of N50 million.

The application fee is N250,000, while the license fee amounts to N2 million. The central bank also mentioned that the specified minimum capital requirement for BDCs, along with any additional capital infusion, will need to be confirmed by the CBN.

“BDC licenses shall be renewable annually subject to compliance with laws and regulations applicable to BDCs and the payment of the non-refundable annual license renewal fee. The application for BDC license shall be processed in two stages, namely: Approval-in-Principle (AIP) and final license,” the CBN said.

The CBN had in June 2014, increased the minimum capital requirement for Bureau De Change operations in Nigeria to N35m in order to weed out what it said were “unserious elements in that sub-sector” and correct some grave inefficiencies and sharp practices.

It then directed all existing Bureau De Change to comply with the new requirements by July 15, 2014. Before the hike in minimum capital requirement from N10 million to N35 million, a total of 3, 208 BDCs were officially registered with the CBN.

In August 2014, the CBN announced that a total of 2, 442 BDCs met the new capital requirement, and by November 2014 a total of 2,512 BDCs had reportedly scaled the re-capitalisation hurdle of the CBN.

However, instead of putting measures in place to effectively monitor the new set of BDCs that had met its rules, the CBN went on another BDC licensing spree.

From the 2,512 BDCs licensed as at November 2014, the number jumped to 5,689 BDCs registered in Nigeria as at June 30, 2021, according to CBN data. That was equivalent to a 126 percent increase or 3,177 new BDCs licensed in just 7 years.t

BDCs are partly being blamed by the Central Bank of Nigeria (CBN) for triggering a relentless slide in the value of the naira.

The primary role of BDCs globally, according to the Association of Bureau De Change Operators of Nigeria (ABCON), is to ensure forex availability to the critical retail sector of the forex market in terms of supply, to bridge the gap between the official and the parallel market exchange rate.

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