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CBN Directs Banks, Processing Companies to Open Cash Hubs

The Central Bank of Nigeria (CBN) and Bankers’ Committee have directed Deposit Money Banks and licensed processing companies to establish cash collection centers.

The cash collection centers, codenamed Bank Neutral Cash Hubs (BNCH)  will  reduce the cost of cash and promote efficiency in the financial system.

In an operational guideline titled: Guidelines for the registration and Operation of Banks Neutral Cash Hubs (BNCH) in Nigeria released yesterday, the apex bank said the BNCH, created in furtherance of its mandate to promote a sound financial system, will operate under the Nigerian Cash Management System (NCMS).

The apex bank said the scheme would reduce cost and improve operational efficiency in the country’s cash management value chain. 

“The financial requirements for an approval to operate as BNCH, which may be amended by the CBN as it deems necessary, include Non-refundable application fee of N100,000; and Non-refundable approval fee of N500,000,” the apex bank said.  

 “The 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 guideline added. 

Continuing, the CBN  said that the  key objective of setting up 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 regulator also spelt out functions of a BNCH, saying it may receive  naira denominated deposits on behalf of financial institutions from individuals and businesses with high volumes of cash.

It may also disburse 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 apex bank however said a BNCH  is not allowed to carry out investing or lending activities, receive, disburse, or engage in any transaction involving foreign currency, sub-contract another entity to carry out its operations, and any other activities that may be prohibited by the CBN. 

The CBN said that BNCHs are expected to comply with the CBN CashlessPolicy,  CBN Consumer Protection Regulations, Provisions of the Central Bank of Nigeria Anti-Money Laundering and Combating the Financing of Terrorism in Banks and Other Financial Institutions in Nigeria Regulation and extant laws of the Federation aimed at combatting money laundering and the financing of terrorism. 

The guideline  allowed CBN have access to the BNCH facility for the purpose of compliance monitoring of activities and examination of records/books. 

“The CBN shall have powers to order any BNCH to meet its outstanding obligations before shutting down its operations.
The Bank shall retain the sole privilege and discretion to license and revoke licenses for BNCH. Other eligible entities where necessary may seek redress through the Bank, which may incidentally lead to the revocation of license,” the apex bank stated. 

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