“Naira’s Crash:” CBN Revokes Licenses of BDC Operators, Asks Them to Re-apply

“Naira’s Crash:” CBN Revokes Licenses of BDC Operators, Asks Them to Re-apply

  • The Central Bank of Nigeria (CBN) has revoked the licenses of Bureau de Change (BDC) operators and asked them to re-apply
  • The apex bank asked the operators to re-apply according to the requirements applicable to their tier
  • In the new circular issued by the bank, CBN said the operators have six months to meet the latest requirement

Legit.ng’s Pascal Oparada has reported on tech, energy, stocks, investment, and the economy for over a decade.

The Central Bank of Nigeria (CBN) has asked all existing Bureau de Change (BDC) operators in Nigeria to re-apply for new operational guidelines,

The bank stated this on Wednesday, May 22, 2024, in a document titled Regulatory and Supervisory Guidelines for Bureau de Change Operations in Nigeria.

CBN revokes BDC licenses, CBN
Governor of the Central Bank of Nigeria (CBN), Olayemi Cardoso Credit: CBN
Source: Facebook

CBN issues new capital requirements for BDCs

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According to the apex bank, all existing BDCs shall reapply for a new license per any of the tiers or license categories of their choice, as provided in the Guidelines.

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The apex bank disclosed that BDCs must meet the minimum capital requirements for the license category applied for in six months starting June 3, 2024.

CBN said:

“All existing BDCs shall meet the minimum capital requirements for the license category applied for within six (6) months from the effective date of the guidelines.”

The release said that the minimum capital requirement for tier 1 BDC operators is N2 billion, while N500 million is required for tier 2 BDCs.

According to the requirements, the tier 1 BDC operators must pay a non-refundable application fee of N1 million and a non-refundable license fee of N5 million.

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The bank expects tier 2 operators to pay a non-refundable application and license fee of N250,000 and N2 million, respectively.

Reports say the new guidelines supersede the Revised Operational Guidelines for Bureau De Change in Nigeria issued in November 2015 and all related circulars and directives.

“The Guidelines take effect from June 3, 2024,” the statements said.

Naira's fortune reverses

The CBN began selling forex weekly to BDCs in March to ease the liquidity crunch in the foreign exchange market.

The bank sold $10,000 to each BDC at a specific rate, asking them to sell at most 1.5%.

The development follows the crash of the Nigerian currency in the FX market in late April.

The naira emerged as the best-performing currency in April, exchanging for almost N1,000 per dollar before crashing again as a liquidity squeeze set in.

Analysts blame naira's fall on liquidity crunch

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Analysts believe that the CBN's lack of intervention in the FX market is to blame for the naira's fall.

They say that CBN ought to have continued selling FX to the operators to ease the system's crunch.

Jane Agbor, an FX trader, said the crunch is felt in almost all sectors of the economy as importers find it challenging to source Forex for operations.

“What we see in the market is a high demand for the dollar and its scarcity is worsening things for importers and those seeking to pay school fees and medicals,” she said.
“The CBN ought to have continued the intervention even if it is at a lower scale. The market is desperately gasping for forex supply.”

BDC operators send important messages to the SEC

Legit.ng earlier reported that the Association of Bureaux De Change Operators of Nigeria (ABCON) requested assistance and direction from the Securities and Exchange Commission (SEC).

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ABCON president Alhaji Aminu Gwadabe made the call during a courtesy call with Dr. Emomotimi Agama, the recently appointed Director-General of SEC.

Proofread by Kola Muhammed, journalist and copyeditor at Legit.ng

Source: Legit.ng

Pascal Oparada avatar

Pascal Oparada (Business editor) Pascal Oparada is a Mass Communications Graduate from Yaba College of Technology with over 10 years of experience in journalism. He has worked in reputable media organizations such as Daily Independent, TheNiche newspaper, and the Nigerian Xpress. He is a 2018 PwC Media Excellence Award winner. Email:pascal.oparada@corp.legit.ng

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