Nigeria’s Central Bank To Extend BDCs Recapitalisation Deadline To June 2025 On Low Compliance
The Central Bank of Nigeria (CBN) has extended the deadline for the recapitalisation of Bureau De Change (BDC) operators from December 3, 2024, to June 3, 2025.
Aminu Gwadabe, president of the Association of Bureaux De Change of Nigeria (ABCON), disclosed the extension during an emergency virtual general meeting held by ABCON for its members. He explained that the CBN made the decision to extend the deadline by six months due to the low level of compliance with the new capital requirements by BDC operators.
The meeting, which had over 220 CBN-licensed BDCs in attendance, along with ABCON council members and other stakeholders, was part of the association’s ongoing engagements with the CBN to facilitate a smooth recapitalisation process. Gwadabe expressed gratitude to the CBN for granting the extension and assured members that the bank is committed to working closely with them to ensure the process is as seamless as possible.
“The CBN is willing to partner with BDCs to ensure that the recapitalisation process is seamless. We are sending a message of unity, collaboration, and opportunities to ABCON members to continue striving to meet the new capital requirements. We thank the CBN for listening and giving us this six-month extension,” Gwadabe said.
The deadline for the recapitalisation applies to existing BDCs, while new operators seeking licenses have an indefinite timeline to obtain them. Gwadabe encouraged members to embrace the opportunities that the recapitalisation process presents, calling them “immeasurable.”
He also outlined some of the key provisions of the CBN regulations governing BDC operations. These regulations empower BDCs to acquire foreign currency from various sources, sell foreign exchange, open both foreign currency and naira accounts with commercial or non-interest banks, and collaborate with their banking partners to issue prepaid debit cards.
Under the new CBN guidelines, Tier-1 BDCs are required to raise a minimum capital of N2 billion to remain operational, while Tier-2 BDCs must raise a minimum of N500 million. Tier-1 BDCs will be permitted to operate nationally, while Tier-2 BDCs will only be allowed to operate within one state of the Federation.
This capital raising initiative is part of the CBN’s reforms aimed at repositioning the BDC sector to better fulfill its role in Nigeria’s foreign exchange market. The new guidelines were issued after consultations with stakeholders and in line with the powers vested in the CBN by Section 56 of the Banks and Other Financial Institutions Act (BOFIA) 2020.
The revised guidelines introduce new licensing requirements, categorize BDCs into Tier-1 and Tier-2 groups, and update the permissible activities, financial, corporate governance, and anti-money laundering (AML), counter-financing of terrorism (CFT), and combating the financing of proliferation (CPF) provisions for BDCs.
According to the new guidelines, Tier-1 BDCs are allowed to operate in any state within the Federation, including the Federal Capital Territory (FCT), and may establish branches and appoint franchisees in any state or the FCT, subject to CBN approval. They must maintain a minimum distance of one kilometre between their branches, as well as between their branches and franchisees. Tier-1 BDCs are permitted to exercise oversight over their franchisees, who can adopt the franchisor’s name, logo, branding, technology platform, and regulatory requirements.
On the other hand, Tier-2 BDCs are restricted to operating within one state or the FCT, may establish up to five branches in their area of operation (with CBN approval), and are required to maintain a minimum distance of one kilometre between their branches. However, Tier-2 BDCs are not allowed to appoint franchisees.
The new rule also prohibits certain entities, including commercial, merchant, non-interest, and payment service banks, financial holding companies, other financial institutions (OFIs), International Money Transfer Operators, payment service providers, and staff members of financial services regulatory and supervisory agencies, as well as regulated financial services providers, from holding a BDC licence.
