Yesterday, the Central Bank of Nigeria (CBN) issued new operational guidelines for Bureau De Change (BDCs), directing existing operators to reapply for new licenses within a six-month deadline to meet the updated minimum capital requirements.
Under the new guidelines, two categories of BDCs, Tier 1 and Tier 2, have been introduced, with minimum capital requirements set at N2 billion and N500 million, respectively. These guidelines were communicated via a circular to all BDC operators and stakeholders in the financial services industry.
Key provisions of the new guidelines include limiting the foreign currency holdings of BDCs (Net Open Position, NOP) to 30 percent of shareholders’ funds unimpaired by losses and restricting total borrowing to 50 percent of shareholders’ funds unimpaired by losses.
The circular, titled “Regulatory and Supervisory Guidelines for BDC Operation in Nigeria,” was signed by Haruna Mustafa, Director of the Financial Policy and Regulation Department.
The circular outlined the rationale behind the reforms, citing the need to reposition the BDC sub-sector to contribute to the foreign exchange market in Nigeria effectively. It highlighted the stakeholder consultations and the authority conferred on the CBN by Section 56 of the Banks and Other Financial Institutions Act (BOFIA) 2020.
In compliance with the new guidelines, all existing BDCs must reapply for a new license within the specified tiers or license categories and meet the minimum capital requirements within six months of the guidelines’ effective date.
These regulatory and supervisory guidelines aim to enhance the efficiency, transparency, and accountability of BDC operations in Nigeria, ensuring their alignment with the broader objectives of the financial services industry.
