Banks have been directed to remove non-deposit taking financial institutions from their transfer lists.
The Nigeria Inter-Bank Settlement System (NIBSS) in a circular signed by its Executive Director, Business Development, Ngover Ihyembe-Nwankwo, said non-deposit taking financial institutions are only allowed to process money not to hold it.
The circular directed to Deposit Money Banks, Merchant Banks, Switches, Mobile money operators and others, said listing non-deposit-taking financial institutions contravenes the CBN guidelines on electronic payment of salaries, pensions, suppliers, and taxes in Nigeria dated February 2014.
The non-deposit institutions listed are switches, payment solution service providers (PSSPs) and super agents.
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It said that while they can process outward transfers as inflows to banks, they are not to receive inflows as their licenses do not permit them to hold customers’ funds.
“This is to bring to your attention that listing non-deposit taking financial institutions such as Switching Companies (Switches), Payment Solution Service Providers (PSSPs) and Super Agents (SA) as beneficiary institutions on your NIP funds transfer channels contravenes the CBN Guidelines on Electronic Payment of Salaries, Pensions, Suppliers and Taxes in Nigeria dated February 2014. For clarity, Switches, PSSPs and SAs may process outward transfers as inflows to banks but are not to receive inflows as their licenses do not permit them to hold customers’ funds.
“Another regulatory advice in this regard is the circular with the caption @Permissible Services and Products of PSSP Operation in Nigeria@, Ref: BPD/DIR/GEN/CIR/05/004 dated May 11, 2018. Consequent on the above, kindly delist all Switches, PSSPs and SAs from your NIP Outward Transfer Channels only (not inwards),” it said.
However, a source said the directive is not targeted at Fintechs but a regulatory measure to ensure there is no abuse of licenses.
“Some of the top fintechs are also registered as Micro-Finance Banks. The directive will help sanitise the sector. Don’t forget that the CBN governor hinted at this during the CIBN dinner,” the source said.
However, it was learnt that flutterwave, Venture Gardens, Interswitch and others might be affected
Daily Trust recalled that CBN governor, Yemi Cardoso at the 58th Annual Bankers Dinner and Grand Finale of the 60th anniversary of the Chartered Institute of Bankers of Nigeria, CIBN, lamented that recent developments in the payment services landscape have raised concerns regarding the use of technology and the existing licensing and regulatory framework.
“We have observed that some licensees are operating outside the approved activities, breaching the boundaries set for them. Any intentional or unintended non-compliance will be subject to sanctions, as operators have the responsibility to ensure that they are licensed for the activities they undertake,” he had said.
He noted that the apex bank would conduct a comprehensive review of the licensing framework for payment services and engage in extensive consultations to develop a new regulatory and compliance framework that is suitable for the technology-driven payment services sector.
