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Forex sales halt: CBN refunds N35m deposits for pending BDC licenses

The Central Bank of Nigeria (CBN) on Thursday commenced the refund of N35 million minimum capital deposits and licensing fees to Bureau De Change (BDC)…

The Central Bank of Nigeria (CBN) on Thursday commenced the refund of N35 million minimum capital deposits and licensing fees to Bureau De Change (BDC) operators that had applied for license but were pending.

The apex bank communicated its decision in a circular sighted by Daily Trust and dated July 28, 2021. The circular signed by Ibrahim Tukur, for Director, Financial Policy and Regulation Department, is coming on the heels of the decision by the CBN to discontinue dollar sales to the Bureau De Change (BDCs) over trading forex wholesale in contravention of their licences, and Nigeria’s forex regulations.

The CBN advised the affected BDCs promoters to forward their requests for the refund in writing to the Director, Financial Policy and Regulation Department, CBN, Abuja.

It further directed all deposit money banks to stop accepting Instructions from customers to transfer capital deposits of N35m to the designated CBN account to apply for BDC licenses.

CBN officials did not respond to our enquiries about deposits refund for existing BDC operators.

However, in a clarification, the Association of Bureaux De Change Operators of Nigeria (ABCON), said the already existing operators are not owed deposits by CBN adding that they are still providing forex services.

The ABCON President, Aminu Gwadabe, said the provision for bidding where operators make deposits to CBN in exchange for forex immediately stopped after CBN’s announcement on Tuesday, stopping the about $110m weekly forex sale to BDCs.

He noted that the N35m deposit is only for new entrants and it is deposit for capital, to prove that they have the capital base required and is released once the final licence is issued.

“BDCs are licensed to provide retail forex services, including buying from the public and also selling to end-users for allowable transactions namely Personal Travel Allowance (PTA), Business Travel Allowance (BTA), payment of medical and school fees.”

He noted that they are permitted to get forex from other sources to transact with.

“While the CBN has stopped dollar sales to BDCs, it has not cancelled their operating licenses or banned BDCs from providing forex services to members of the public.”

Meanwhile the Committee of Banks Chief Executive Officers briefing pressmen in Lagos after a meeting with CBN officials in Lagos, said the exchange rate will drop to around N423 to a dollar soon.

Responding to the spike in dollar up to N523/$ after the CBN declaration, the CEO of Guarantee Trust Holdco (GTCo), Segun Agbaje said: “What we saw in the market yesterday and today is an aberration. The rate will come down. Very soon, you will buy at N423 or N425 at most. “

He said people can start walking into any bank branch to initiate their request.

Head of the committee and CEO of Access Bank, Herbert Wigwe, said CBN has sent circulars asking banks to set up dedicated channels for requests.

“There will be no additional cost charged by the banks for offering these services.”

On the limit of intervention of $100 million per week, Wigwe said: “In most places of the world, dollars are not supplied by the central banks alone.

“Is the CBN going to increase supply? That is anybody’s guess but we as banks receive dollars from International Money Transfer Organisations (IMTOs) and we can use these resources to support the market up to a specific limit.”

MD of FCMB, Yemisi Edun said the service areas will be clearly marked as with foreign remittances and anyone with the correct documentation has nothing to worry about.

“The deposit money banks are cooperating by putting infrastructure and processes in place to ensure there is no reversal of this policy statement by the CBN.

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