CBN Bars Bank Neutral Cash Hubs from FX Transactions

James Emejo

The Central Bank of Nigeria (CBN) has said Bank Neutral Cash Hubs (BNCHs), established to provide a platform for customers to make cash deposits and receive value irrespective of the bank with which their account is domiciled – are not permitted to receive, disburse, or engage in any transaction involving foreign currency.

The central bank also barred the hubs from carrying out investing or lending activities; sub-contract another entity to carry out their operations as well as any other activities that may be prohibited by the apex bank.

The CBN disclosed this in the Guidelines for the Registration and Operation of Bank Neutral Cash Hubs (BNCH) in Nigeria, which was posted on its website.

The initiative, which was developed in collaboration with the Banker’s Committee is in furtherance of the central bank’s mandate to promote a sound financial system in the country.

The BNCH is one of the initiatives from the Nigerian Cash Management System (NCMS) conceived by both parties to reduce cost and improve operational efficiency in the country’s cash management value chain.

Essentially, the BNCHs are cash collection centers to be established by registered (licensed) processing companies or Deposit Money Banks (DMBs) based on business needs.

According to the apex bank, the hubs are, however, authorised to receive Naira denominated deposits on behalf of financial institutions from individuals and businesses with high volumes of cash.

They are also allowed to disburse Naira denominated withdrawals on behalf of financial institutions to individuals and businesses with high volumes of cash as well as any other activities that may be permitted by the CBN.

Under the programme, only deposit money banks and Cash Processing Companies (CPCs) are permitted to apply for registration of a BNCH.

Also, the guidelines specified the financial requirements for approval to operate as BNCH, which may be amended by the CBN as it deems necessary.

These include the non-refundable application fee of N100, 000; and a non-refundable approval fee of N500, 000.