The Central Bank of Nigeria (CBN), has issued guidelines for setting up Bank Neutral Cash Hubs, BNCHs.
According to CBN, BNCHs are being initiated in furtherance of its mandate to promote a sound financial system in Nigeria, in collaboration with Banker’s Committee in order to reduce the cost and improve operational efficiency in the country’s cash management value chain.
The apex bank said, “BNCHs are cash collection centers to be established by registered (licensed) processing companies or Deposit Money Banks, DMBs, based on business needs.
“They will be located in areas with high volumes of commercial activities and cash transactions. The hubs will provide a platform for customers to make cash deposits and receive value irrespective of the bank with which their account is domiciled.
“The key objective of setting up Bank Neutral Cash Hubs, BNCH, is 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 apex ban said that the guideline was to provide minimum standards and requirements for BNCH registration and operations for effective supervision.
According to the guideline, “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; disbursement of Naira denominated withdrawals on behalf of financial institutions to individuals and businesses with high volumes of cash.; and any other activities that may be permitted by the CBN.
The guideline however prohibits BNCHs from: investing or lending activities; receiving, disbursing or engaging in any transaction involving foreign currency; nor sub-contract another entity to carry out its operations
Only Deposit Money Banks, DMBs, and Cash Processing Companies, CPCs, are eligible to apply for licences for BNCHs.
According to the guideline, a promoter of a BNCH “shall submit a formal application to the Director, Currency Operations Department, COD, requesting to be granted approval to operate a BNCH, which shall be processed in two stages, namely: Approval-in-Principle, AIP, and Final Approval
“Note that a formal application for approval shall be made for every new BNCH site to be set up.”
Requirements for Approval-In-Principle
Prospective promoters of BNCH, CPC or DMB, seeking to operate a BNCH are requested to apply in writing to the Director, Currency Operations Department, COD.
They are to submit, along with the application: a valid DMB license or a valid proof of CPC registration issued by the CBN; a non-refundable application fee of N100,000 only, or such other amount as the CBN may specify, in a bank draft payable to the CBN; evidence of board resolution approving the application duly signed by the Chairman and Secretary of the board of the CPC or the DMB; detailed business plan or feasibility report which shall, at a minimum, include: Objectives of the BNCH; Services to be rendered by the BNCH; and Justification for the application.
Other requirements include: organizational structure, showing functional units, responsibilities, reporting relationships; a list of proposed staff in charge of BNCH operations/services; Technical Services Agreement (where applicable); and certificate of Incorporation and certified true copies of other incorporation documents of the CPC or the DMB; detailed Manuals and Policies, including operations manual, dispute resolution protocols, Whistle-blowing policy, Enterprise Risk Management, ERM, Framework; and Code of Business Ethics and Conduct.