The Central Bank of Nigeria (CBN) is contemplating a substantial increase in the minimum share capital requirement for Bureau De Change (BDC) operators, proposing N2 billion for Tier 1 licenses and N500 million for Tier 2 licenses, as outlined in the draft REVISED REGULATORY AND SUPERVISORY GUIDELINES FOR BUREAU DE CHANGE OPERATIONS IN NIGERIA published by the apex bank.
Previously set at N35 million for a general license, the proposed adjustments signify a significant shift in regulatory standards for BDC operations in the country.
Under the new guidelines, Tier 1 BDCs would be authorized to operate nationally, with the capacity to open branches and appoint franchisees, subject to CBN approval. Additionally, Tier 1 BDCs would exercise supervisory oversight over their franchisees, with all franchisees required to adopt their franchisor’s name, branding, technology platform, and operational standards.
Conversely, Tier 2 BDCs would be restricted to operating within a single state or the Federal Capital Territory (FCT), with a maximum of three locations, including a head office and two branches, subject to CBN approval. Tier 2 BDCs would not be permitted to appoint franchisees.
Tier 1 operators would be required to maintain a minimum share capital of N2 billion and a Mandatory Caution Deposit of N200 million. In contrast, Tier 2 operators must maintain a minimum share capital of N500 million and a Mandatory Caution Deposit of N50 million. Application and license fees would also vary accordingly.
The proposed guidelines also stipulate that the CBN must verify the prescribed minimum capital and any subsequent capital injections. Additionally, BDC licenses would be renewable annually, subject to compliance with relevant laws and regulations, along with the payment of non-refundable annual license renewal fees.
The Association of Bureau De Change Operators of Nigeria (ABCON) has opposed the proposed increase in capital requirements, advocating for industry consolidation rather than recapitalization. ABCON’s President, Aminu Gwadebe, emphasized the efficiency and profitability of operations within the existing financial threshold of N35 million.
The CBN’s proposed regulatory adjustments aim to enhance oversight, reduce irregularities in the forex market, and promote stability within the sector. This move is expected to facilitate industry consolidation, encouraging mergers and acquisitions among BDC operators, ultimately contributing to a more regulated and compliant forex market landscape.
