The Central Bank of Nigeria (CBN) has extended the deadline for recapitalization of Bureau De Change (BDC) operators from December 3, 2024 to June 3, 2025.

Aminu Gwadabe, President of the Association of Foreign Exchange Bureaus of Nigeria (ABCON), revealed the extension during an emergency virtual general meeting organized by ABCON for its members. He explained that the CBN took the decision to extend the deadline by six months due to the low level of compliance with the new capital requirements by CDB operators.

The meeting, attended by over 220 CBN-licensed BDCs, as well as ABCON board members and other stakeholders, was part of the association’s ongoing engagements with the CBN to facilitate a recapitalization process fluid. Gwadabe expressed gratitude to the CBN for granting the extension and assured members that the bank is committed to working closely with them to ensure the process is as smooth as possible.

“The CBN is ready to partner with BDCs to ensure that the recapitalization process goes smoothly. We are sending a message of unity, collaboration and opportunity to ABCON members to continue striving to meet new capital requirements. We thank the CBN for listening to us and granting us this six-month extension,” Gwadabe said.

The recapitalization deadline applies to existing BDCs, while new operators seeking licenses have an indefinite period to obtain them. Gwadabe encouraged members to seize the opportunities presented by the recapitalization process, calling them “immeasurable”.

He also highlighted some of the key provisions of the CBN regulations governing the operations of the BDC. These regulations allow BDCs to acquire foreign exchange from various sources, sell foreign exchange, open foreign exchange and naira accounts with commercial or interest-free banks and collaborate with their banking partners to issue prepaid debit cards.

Under the new CBN guidelines, Tier 1 BDCs must raise a minimum capital of N2 billion to remain operational, while Tier 2 BDCs must raise a minimum of N500 million. Tier 1 BDCs will be allowed to operate nationally, while Tier 2 BDCs will only be allowed to operate in one state of the Federation.

This capital raising initiative is part of the CBN’s reforms aimed at repositioning the CDB sector to better fulfill its role in Nigeria’s foreign exchange market. The new guidelines were issued after consultations with stakeholders and in line with the powers conferred on the CBN by Section 56 of the Banks and Other Financial Institutions Act (BOFIA) 2020.

The revised guidelines introduce new licensing requirements, classify BDCs into Tier 1 and Tier 2 groups and update permitted activities, financial, corporate governance and anti-money laundering activities. Money (AML), Counter Terrorism Financing (CFT) and Counter Proliferation Financing (CPF) provisions for BDCs.

Under the new guidelines, Tier 1 BDCs are permitted to operate in any state of the Federation, including the Federal Capital Territory (FCT), and can establish branches and appoint franchisees in any State or in the FCT, subject to CBN approval. They must maintain a minimum distance of one kilometer between their branches, as well as between their branches and franchisees. Tier 1 BDCs are permitted to exercise oversight over their franchisees, who may adopt the franchisor’s name, logo, brand, technology platform, and regulatory requirements.

On the other hand, Tier 2 BDCs are limited to operating in a single state or the FCT, can establish up to five branches within their area of ​​operation (with approval from the CBN) and are required to maintain a minimum distance of one kilometer between their branches. However, Tier 2 BDCs are not permitted to appoint franchisees.

The new rule also prohibits certain entities, including commercial, merchant, interest-free and payment service banks, financial holding companies, other financial institutions (AIFs), international money transfer operators, payment services and staff members of financial services regulators and regulators. supervisory agencies, as well as regulated financial service providers, to hold a BDC license.