The Central Bank of Nigeria (CBN) has concluded plans to increase the minimum capital requirements for Bureau De Change (BDC) operators to N2 billion for Tier 1 licenses and N500 million for Tier 2 licenses.
This was contained in a circular dated February 23, 2024, and addressed to all BDC operators and stakeholders in the financial services industry.
The capital requirement was previously N35 million for a general license.
The development which seeks to enhance the regulatory framework for the Bureau de Change operators was part of the ongoing reforms of the Nigerian foreign exchange market.
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.
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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 CBN also noted that the specified minimum capital requirement for BDCs, along with any additional capital infusion, will need to be confirmed by the apex bank.
“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 N35 million 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.
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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