CBN Releases Guidelines for Registration, Operation of Bank Neutral Cash Hubs in Nigeria
Oru Leonard
The Central bank of Nigeria has CBN released guidelines for registration, operation of Bank Neutral Cash Hubs in Nigeria (BNCH).
BNCHs are cash collection centers to be established by registered processing companies or Deposit Money Banks (DMBs) based on business needs. They will be located in areas with high volumes of commercial activities and cash transactions.
According to the CBN guidelines for the registration and operation of Bank Neutral Cash Hubs in Nigeria (BNCH) which was recently released, the hubs will provide a platform for customers to make cash deposits and receive value irrespective of the bank with which their account is domiciled.
This guideline aims to provide minimum standards and requirements for BNCH registration and operations for effective supervision.
The CBN disclosed that the key objective of setting up Bank Neutral Cash Hubs (BNCH) is to reduce the risks and cost borne by banks, merchants and huge cash handlers in the course of cash management activities; deepen financial inclusion; and leverage on shared services to enhance cash management efficiency.
The guidelines stated that the financial requirements for an approval to operate as BNCH, which may be amended by the CBN as it deems necessary, are Non-refundable application fee of one hundred thousand Naira (N100,000); and Non-refundable approval fee of five hundred thousand Naira (N500,000).
The threshold for eligible transactions at a BNCH according to the guidelines will be a minimum transaction value of ₦500,000 (Five hundred thousand Naira only), for individuals and a minimum transaction value of ₦1,000,000 (One million Naira only) for corporate entities.
Furthermore the registration requirements stipulates that the promoters will submit a formal application to the Director, Currency Operations Department (COD) requesting to be granted approval to operate a BNCH, which shall be processed in two stages, namely: Approval-in-Principle (AIP) and Final Approval.
Permissible Activities
In the aspect of permissible activities, a BNCH may carry out the following: Receipt of Naira denominated deposits on behalf of financial institutions from individuals and businesses with high volumes of cash; High volume cash disbursement to members of the public on behalf of financial institutions; and Any other activities that may be permitted by the CBN.
Non Permissible Activities
For the non permissible activities, a BNCH shall not: Carry out investing or lending activities; Receive, disburse, or engage in any transaction involving foreign currency; Undertake any other transaction which is not prescribed by this guideline; Sub-contract another entity to carry out its operations; and Any other activities that may be prohibited by the CBN.
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