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CBN bars cash collection firms from lending, investment activities

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The Central Bank of Nigeria (CBN) precluded the operators of Bank Neutral Cash Hubs (BNCH) from carrying out lending and investment activities in a new guidelines rolled out by the regulatory bank for the cash collection operators.

The regulatory bank also barred them from receiving, disbursing, or engaging in any transaction involving foreign currency.

”A BNCH shall not carry out investing or lending activities; receive, disburse, or engage in any transaction involving foreign currency; undertake any other transaction which is not prescribed by this guideline; sub-contract another entity to carry out its operations; and any other activities that may be prohibited by the CBN,” the CBN stated in the guidelines.

It, however noted that, “A BNCH may carry out the following: Receipt of naira denominated deposits on behalf of financial institutions from individuals and businesses with high volumes of cash; high volume cash disbursement to members of the public on behalf of financial institutions; any other activities that may be permitted by the CBN.”

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The regulatory bank stated that its key objectives of setting up BNCH was to reduce the risks and cost borne by banks, merchants and huge cash handlers in the course of cash management activities; deepen financial inclusion: and leverage on shared services to enhance cash management efficiency.

The CBN said that, DMBs   and Cash Processing Companies (CPCs) can apply for registration of a BNCH.

To operate as a BNCH, a non refundable fee of N600,000 is expected to be paid to the CBN before approval can be granted while the regulator also placed a limit of N500,000 for individual deposits and withdrawal and N1 million limit for corporate entities deposits and withdrawal.

“The financial requirements for an approval to operate as BNCH which may be amended by the CBN as it deemed necessary are as follows: non refundable application fee of one hundred thousand Naira (N100,000) and non refundable approval fee of five hundred thousand Naira (N500,000).

“The threshold for eligible transactions at BNCH shall be as follow: A minimum transaction value of¦ 500,000 (five hundred thousand naira only) for individuals and a minimum transaction value of¦  1,000,000 (one million naira only) for corporate, the CBN stated in the guidelines.

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