CBN authorises Payment Service Banks to sell forex

The Central Bank of Nigeria (CBN) has authorised Payment Service Banks (PSBs) to sell foreign currencies (forex) realised from inbound cross-border personal (remittances) to licenced foreign exchange dealers.

The apex bank also set N5 billion minimum capital requirement for PSBs, which are expected to fully begin operation soon.

These are contained in the guideline for PSBs operations released by the apex bank at the weekend, which said PSBs are to accept deposits from individuals and small businesses, which shall be covered by the deposit insurance scheme and carry out payments and remittances (including inbound cross-border personal remittances) services through various channels within Nigeria.

The guidelines, signed by CBN Director, Financial Policy and Regulation Department, Kelvin Amugo, said PSBs shall maintain not less than 75 per cent of their deposit liabilities in CBN securities, Treasury Bills (TBs) and other short-term federal government debt instruments at any point in time.

“PSBs shall have the privilege to make their investments from the CBN window. All funds in excess of the PSB’s operational float should be placed with DMBs. PSBs shall participate in the payment and settlement system and have access to the inter-bank and the CBN collateralised repo window for its temporary liquidity management,” it said.

“PSBs shall render quarterly returns indicating the number of financially excluded customers on-boarded during the quarter to which the returns relate. All PSBs shall be required to interface with the Nigeria Inter-bank Settlement System (NIBSS) platform in order to promote interconnectivity and interoperability of operations within the Nigeria banking system,” its said.

The CBN, in furtherance of its mandate to promote a sound financial system in Nigeria and the need to enhance access to financial services for low income earners and unbanked segments of the society, has instituted the Payment Service Bank.

The apex bank, in the circumstance and in collaboration with critical stakeholders in the digital financial ecosystem, such as the Nigerian Communication Commission, commercial banks, mobile money operators and telecommunication companies have conducted several study tours of other jurisdictions that have made significant progress in driving financial inclusion.

Accordingly, PSBs are envisioned to facilitate high-volume low-value transactions in remittance services, micro-savings and withdrawal services in a secured technology-driven environment to further deepen financial inclusion and help in attaining the policy objective of 20 per cent exclusion rate by 2020.

The key objective of setting up PSBs is to enhance financial inclusion by increasing access to deposit products and payment/remittance services to small businesses, low-income households and other financially excluded entities through high- volume low-value transactions in a secured technology-driven environment.

The PSB are to operate mostly in the rural areas and unbanked locations targeting financially excluded persons, with not less than 25 per cent financial service touch points in such rural areas as defined by the CBN from time to time; enter into direct partnership with card scheme operators.