EXCLUSIVE: CBN May Reduce N2bn Capitalisation Requirement For BDCs, As ABCON Set To Submit Input On New Regulation

After resuming forex intervention to Bureau de Change Operators (BDCs), the Central Bank of Nigeria (CBN) is willing to lower the N2bn capitalisation requirement for BDCs and other strict rules which may hinder the smooth management of the BDC segment of the Nigerian foreign exchange market.

THE WHISTLER can report that the executive members of the Association of Bureau de Change Operators of Nigeria (ABCON) and other stakeholders have been contacted by the CBN to come up with suggestions on the best way to run BDC in Nigeria.

THE WHISTLER understands from a circular sent by ABCON to owners of licenced BDCs that CBN has contacted the association to make input in the regulation.

Last week, the CBN released the ‘Revised Regulatory and Supervisory Guidelines for Bureau De Change Operations in Nigeria’ which increased the capitalisation for operators.

The CBN is trying to control the rate of fall of the naira after it floated the currency to make it attract the needed foreign exchange into the Nigerian economy through foreign direct investments, portfolio investments and diaspora remittances.

The CBN believes floating the naira is a short-term measure to save the currency, while the monetary authorities make policies that will improve local production for export in the long-run.

However, the currency depreciated beyond the expectation of the apex bank to over N1,900 at the BDC segment of the market and N1600 at the Nigerian Autonomous Foreign Exchange Market last week.

The CBN had since last year hunted BDCs, who it believes are at the heart of speculative activities in the forex market leading to the new guidelines.

The regulation divided BDC operations into two- ‘Tier 1 BDC’ and ‘Tier 2 BDC’.

According to the CBN, a Tier 1 BDC is authorized to operate on a national basis, adding that it could open branches and may appoint franchisees, subject to the approval of the apex bank.

But the capitalisation for a Tier 1 BDC is N2bn and a mandatory caution deposit of N200,000.

“A Tier 2 BDC is authorized to operate only in one state or the FCT. It may have up to three locations- a head office and two branches, subject to approval of the CBN,” the guideline said.

The capitalisation for the Tier 2 BDC was pegged at N500m. The circular caused tension among BDCs who felt their businesses were under threat.

However, the circular reveals that the guideline is not final and the CBN is seeking input from ABCON members before releasing the final regulation in March.

THE WHISTLER understands that directors of BDCs and ABCON executives would also decide on the right capitalisation that best suits their members and would communicate to the CBN for consideration.

The circular reads, “The CBN urged the ABCON Exco to inform members that the new circular to all Bureaux de change on Revised Regulatory and Supervisory Guidelines is just a draft that requires our input to the draft.

“It is not cast in stone and is not a final regulation. In the light of the above, accept our congratulations and remain very compliant.

“It is also important to note that there is no more business as usual as any infringement or infraction will result in outright revocation of license and prosecution.”