The Central Bank of Nigeria in the course of its legitimate mandate to promote a sound financial system birthed the Nigerian Cash Management System which seeks to reduce costs and improve operational efficiency in the country’s cash management value chain, leading to the creation of Bank Neutral Cash Hubs (BNCH) which are cash collection centers established by licensed processing companies or deposit money banks based on business needs.
This article will be looking at the following topics:-
– The components of the regulatory framework governing BNCHs in Nigeria.
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– The objectives of the regulatory framework governing BNCHs in Nigeria.
– Permissible and Non-permissible activities of BNCHs.
– Registration requirements for BNCHs in Nigeria.
What are the main components of the regulatory framework governing BNCHs in Nigeria?
BNCHs are regulated by the CBN Guidelines For the Registration & Operation of Bank Neutral Cash Hubs in Nigeria . These Guidelines are made pursuant to the Central Bank of Nigeria Act 2007.
What are the objectives of the CBN Guidelines?
– To provide minimum standards and requirements for BNCH registration and operations for effective supervision.
– To reduce the risks and costs borne by banks, merchants & huge cash handlers in the course of cash management activities.
What are the permissible and non-permissible activities of BNCHs under the CBN Guidelines?
Permissible Activities
– The receipt of Naira denominated deposits on behalf of FIs from individuals and businesses with high cash volumes.
– The disbursement of Naira denominated withdrawals on behalf of FIs to individuals and businesses with high cash volumes.
Non-permissible Activities
– Lending activities.
– Investing activities.
– Subcontracting another entity to carry out BNCH operations.
– Engaging in foreign exchange transactions.
– Any other activity prohibited by the CBN.
Who is eligible to promote and own a BNCH?
BNCHs can only be promoted by either deposit money banks or cash processing companies (you can consult your lawyer on the registration requirements for cash processing companies).
What are the registration requirements for BNCHs in Nigeria?
BNCHs registrations are processed in 2 stages :-
- The Approval-in-Principle (AIP) stage.
- The Final Approval stage.
The AIP stage
This involves sending the following to the CBN :-
- A written application for BNCH registration.
- A valid deposit money bank license or proof of CPC registration issued by the CBN.
- Evidence of a non-refundable application fee payment of 100 Thousand Naira to the CBN.
- Evidence of a board resolution approving the application signed by the deposit money bank /CPC board chairman and secretary.
- A detailed business plan/feasibility report.
The Final Approval stage
Upon the grant of an AIP, the promoters of a BNCH shall submit the following:-
- Evidence of office location for the purpose of BNCH business take off.
- Evidence of an active insurance policy to cover the hub’s vault cash.
- Evidence of ability to meet the technical requirements and provision of modern infrastructural facilities.
- Evidence of a collaboration arrangement with the Nigerian Police Force.
- A business continuity plan.
- Evidence of a non-refundable 500,000.00 Naira approval fee payment to the CBN.
What are the ways in which a BNCH can cease operations?
A BNCH can cease operations by :-
– An order of the CBN.
– Voluntarily by the BNCH itself subject to communicating a minimum 90 day notice to the CBN.
A BNCH ceasing operations is also subject to the CBN having the powers to order any BNCH to meet its outstanding obligations before shutting down its operations.