Nigeria: CBN Bans Fundraising Operators From Lending Business

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The Central Bank of Nigeria, CBN, has banned fundraising operators, also known as Bank Neutral Cash Hubs (BNCH), from engaging in lending and investment activities.

The apex bank also prohibited them from receiving, disbursing or engaging in any transaction involving foreign currencies.

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The apex bank has indicated this in its operating guidelines for the BNCH.

He said: “The unauthorized activities of BNCH according to the CBN are: a BNCH shall not engage in investment or lending activities; receive, disburse or engage in any transaction involving foreign currency; undertake any other transaction that is not prescribed by this Directive; outsourcing to another entity the performance of its operations; and any other activity that may be prohibited by the CBN.”

He noted, however, that “a BNCH can perform the following operations: receiving naira-denominated deposits on behalf of financial institutions from individuals and businesses with large volumes of cash; disbursing a volume raising cash to members of the public on behalf of financial institutions; any other activities that may be authorized by the CBN.”

According to the CBN, the main purpose of establishing the BNCH was to reduce the risks and costs borne by banks, traders and huge money managers in cash management activities; deepen financial inclusion: and leverage shared services to improve cash management efficiency.

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

The apex bank noted that the financial requirements for approval to operate as a BHCN is a non-refundable fee of N600,000. It also set a threshold of N500,000 for individual deposits and withdrawal limit and of N1 million for deposits and corporate body withdrawal limit.

He said: “The financial requirements for an approval to operate as a BNCH which may be amended by the CBN as it deems necessary are as follows: Non-refundable application fee of One Hundred Thousand Naira (N100,000) and Five Hundred Thousand Naira (N500,000) Non-Refundable Approval Fee.

“The threshold for transactions eligible for BNCH is as follows: 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 companies.

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