The Central Bank of Nigeria (CBN), has fixed the sum of N5 billion as the minimum capital base for Mobile Money Banks (MMO) in Nigeria adding that it is also willing to grant more licences for payment service banks.
The Bank in a circular said that telecom firms, banking agents, retail chains and postal services could apply for licences to become payment banks but they would need to set up a separate company for it with a minimum capital of N5 billion and run it as an independent entity from their existing operations.
The apex bank has granted three licences so far to 9PSB, a unit of local telecom firm, 9mobile, and two others as Nigeria wants to open up its digital financial services sector, which will help millions of Nigerians who do not have bank accounts.
The success of mobile money in East Africa has convinced investors and the industry that financial services are the next growth area for the telecoms sector, where prices for basic services are falling.
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But the licensing requirement in Nigeria risks putting off telecom companies. When the central bank issued preliminary guidelines for payment banks in 2018 for discussion, telecom companies argued that they are not banks and do not need a capital base.
The apex Bank said in its circular that it could ask payment banks to recapitalise for specific risks. Payment banks should operate mostly in rural areas and unbanked locations, accepting deposits from individuals and small businesses, but cannot grant loans, it said.
According to CBN guidelines; “Payment Service Banks shall operate mostly in the rural areas and unbanked locations targeting financially excluded persons, with not less than 25 percent 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.
“Such cards shall not be eligible for foreign currency transactions; deploy Point of Sale devices; be at liberty to operate through banking agents (in line with the CBN’s Guidelines for the Regulation of Agent Banking and Agent Banking Relationships in Nigeria); roll out agent networks with the prior approval of the CBN; use other channels including electronic platforms to reach-out to its customers; establish coordinating centres in clusters of outlets to superintend and control the activities of the various financial service touch points and banking agents; be technology-driven and shall conform to best practices on data storage; security and integrity; and set up consumer help desks (physical and online) at its main office and coordinating centres.
“The Payment Service Banks shall use the words ‘Payment Service Bank’ in its name to differentiate it from other banks. Furthermore, the name of a PSB shall not include any word that links it to its parent company”.
The CBN said that Payment Service Banks shall carry out the following activities: accept deposits from individuals and small businesses, which shall be covered by the deposit insurance scheme; carry out payments and remittances (including inbound cross-border personal remittances) services through various channels within Nigeria; sale of foreign currencies realised from inbound cross-border personal remittances to authorised foreign exchange dealers; issue debit and pre-paid cards on its name; operate electronic wallet; render financial advisory services; invest in FGN and CBN securities; and carry out such other activities as may be prescribed by the CBN from time to time.”
Source: THEWILL
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