Bureau De Change (BDC) operators in the country have decried the sharp increase in their minimum capital requirement from N35 million to N500 million by the Central Bank of Nigeria (CBN), saying it is against global standard.
This represents an increase of over 1,328 per cent for the Tier 1 capital requirement alone.
President, Association of Bureau De Change Operators of Nigeria (ABCON), Aminu Gwadabe, who made this known, called for a review of the CBN’s directive for BDC operators to increase their capital base.
“You increased the capital from N10 million to N35 million in 2014 and now you are raising the capital base of a BDCs from N35 million to N500 million for Tier 2 operators and N2 billion for Tier 1 operators
It’s highly against global standards,” Gwadabe said.
He said this at the 8th edition of the Vanguard Economic Summit, themed: ‘Reforms In The Era of Global Economic Uncertainties: Whither Nigeria?’ on Thursday, May 23, in Lagos.
The CBN recently reviewed minimum capital requirements for Tier 1 BDC operators to N2 billion while for Tier 2 BDC operators is N500 million.
Yesterday the apex bank directed that BDC’s are required to meet the minimum capital requirements for the licence category applied for six months starting June 3.
He said that compared to other countries the new capital is really high.
“The UK BDC operator licence is 50,000 pounds converting at N2,000 you are talking of N100 million,”
“In Uganda, the capitalisation of BDC is $13,000. In India, it’s $67,000, so regulators should look at global standards,” Gwadabe said.
Director of risk CBN, Blaise Ijebor, representing Olayemi Cardoso said that CBN’s directive is in line with their efforts to ensure BDCs focus on its initial vision of performing smaller transactions.
“One of the things we want to do is make BDCs focus on the original conceived vision, which is to provide that market structure for people who need to do small small transactions and do not need to go to the banks to do those transactions,” he said.
He said to regulate an industry, people who are regulated need to have enough strength to respond to that transaction.
“So we need BDC to come together to form bodies, that way regulation is not too extensive for them. They can receive regulation, apply to regulation, and everything will work better for everybody,” he said.
“And that is why we are increasing the capital so that they have enough money to invest in that infrastructure to provide this kind of service, or to full regulation,” Blaise said.