The Nigerian Apex Bank CBN has introduced a new capitalization requirement for Payment Service Banks which includes: Banking agents, Mobile Money Operators (MMOs), Retail chains (Supermarkets), Telecommunications companies (Telcos), with subsidiaries that could be convert into Payment Service Banks.
According to the Apex bank’s Guidelines For Licensing and Regulation of Payment Service Banks in Nigeria (PSBs) should have a minimum capital requirement of ₦5 billion, remitted. CBN is also proposing that entities applying for a PSB license should pay a non-refundable application fee of ₦500,000 as well as a non-refundable licensing fee of ₦2 million.
These prepositions are contained in the exposure draft on the guidelines for licensing and regulation of PSBs unveiled by the Apex bank earlier in the week.
This mandate was contained in the circular released to banks, telecommunication companies, MMOs, banking agents and the Nigerian Communications Commission (NCC) posted on its website. The CBN stated that the PSB initiative was part of its efforts to:
promote financial inclusion and enhance access to financial services for low income earners and unbanked segments of the society through leveraging on technology.”
This is coming six years after the Nigerian Apex bank launched the National Financial Inclusion Strategy (NFIS), with a major cut out goal to ensure that over 80 per cent of the Nigerian adult population are bankable and have access to financial services by 2020.
However, six years after this strategy was implemented the country’s financial inclusion rate has continued to remain below par and expectation.
The Apex bank also revealed that the decision to license PSBs was not accidental, but came after several study tours of other jurisdictions that have made significant progress in driving financial inclusion which was conducted in collaboration with the NCC, banks, MMOs and telcos.
According to the official statement made by the Apex bank of Nigeria
PSBs are expected to leverage on mobile and digital services to enhance financial inclusion and stimulate economic activities at the grassroots through the provision of financial services. PSBs will also enable high-volume low-value transactions in remittance services, microsavings and withdrawal services in a secured technology- driven environment. Accordingly, PSBs are envisioned to facilitate high-volume low-value transactions in remittance services, micro-savings and withdrawal services in a secured technology-driven environment to further deepen financial inclusion and help in attaining the policy of 20% exclusion rate by 2020.
Important to note in the report released by the Apex bank, PSBs will mostly operate in rural and unbanked locations in the country with not less than 503 physical access points which comes in line with the bank’s definition of the ‘rural center’ these PSBs are also allowed to use other electronic platforms to reach-out to their target audience and customers.
Furthermore, permissible activities for PSBs, according to the guidelines, include, maintaining savings accounts and accepting deposits from individuals and small businesses, which shall be covered by the deposit insurance scheme; carrying out payments and remittance (including inbound cross-border personal remittances) services through various channels within Nigeria; issuing debit and pre-paid cards; investing in FGN and CBN securities and operating electronic purse.
Sadly, the CBN is proposing that these PSBs will not be permitted to grant any form of loans, advances and guarantees; trade in the foreign exchange market except when maintaining savings accounts and accepting deposits from individuals and small businesses and undertake insurance underwriting.
This certainly means that the Nigerian FinTech space, which appears to be the new big thing will become the focal point of the Apex Bank and this would take out every possibility of any of the status metamorphosing into a micro-finance outlet any time soon.