BDCs Respond to CBN’s Requirement, Gives Conditions to Operate New Guideline

• The Association of Bureau De Change of Nigeria has reacted to the recent directive by the CBN to the Bureau De Change operators
• The earlier directive had suggested raising the share capital of operators to N2 billion and N500 million for Tier 1 and Tier 2 licenses
• The president of the association said the proposed cautionary deposit is not global practice; neither are BDCs engaging in deposit-taking operations

Legit.ng journalist Zainab Iwayemi has over three years of experience covering the Economy, Technology, and Capital Market.

Aminu Gwadabe, the president of the Association of Bureau De Change of Nigeria, has reacted to the proposed requirement recently issued by the Central Bank of Nigeria.

He stated that if the suggested operating principles are implemented, association members will consider mergers.

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This comes after the CBN suggested raising the share capital of Bureau De Change operators to N2 billion and N500 million for Tier 1 and Tier 2 licenses, respectively.

As reported in a Punch report, a general licence formerly cost the currency operators N35 million.

The development, however, means that BDC license holders would be required to take caution deposits of N200 million for Tier 1 and N50 million for Tier 2, respectively.

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What are the BDCs proposing?

Speaking on the development, Gwadabe said the BDCs are demanding a general license hold.

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He said:

“Definitely, that is why we are asking for the general license hold, where during that period of consolidation, no new licenses should be issued. They should allow the old licenses to come together and form those mega, consolidated operations in cash sale and ownership structure.”

As argued by the president of ABCON, BDCs are not conducting deposit-taking operations, which would provide depositors with a safety net in case of a bank failure.

He added that the suggested cautionary deposit is not a worldwide practice.

He said:

“There are some absolute figures that we are going to review and give our recommendation on those figures because they are high and in some places, they are not even existent. If you are talking about cautionary deposits, there is nowhere in the world where a bureau de change is made to pay a cautionary deposit.”

Gwadabe said that after zonal meetings of ABCON's more than 5,000 members nationwide, a committee will be formed to discuss and determine the industry's position regarding the CBN's proposals.

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According to him, the central bank is sharing a draft framework for the BDC subsector for the first time to solicit feedback.

He claimed that their opinions are often not valued and not followed along. It praised the central bank for disclosing the draft as a result.

He added:

“It’s just like when you had microfinance bank consolidation. It took them a while; many inputs were generated, and many things were reviewed. So, reform is a dynamic thing; it is a continuous process. It has been done in the banking industry and will continue to be done in the banking industry. It is all about reforms, and we embrace reforms.”

Gwadabe added that the licenses for Tier 1 and Tier 2 BDCs, as well as other elements of the suggested rules, would be examined by ABCON's members.

BDC operators open up on alleged shutdown

Legit.ng reported that ABCON spoke on Abuja Bureau de Change operators' alleged shutdown of forex operations.

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Legit.ng earlier reported that BDC operators in Abuja announced the indefinite closure of their business premises on Thursday, February 1, 2024.

In a statement, Dr Aminu Gwadabe, ABCON President, said the information on the shutdown of forex operations by Abuja BDCs was incorrect and never emanated from the national body or zonal offices of ABCON.

Source: Legit.ng