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CBN Issues New Regulatory Framework For Payment Service Banks

The Central Bank of Nigeria (CBN) has issued a Supervisory Framework for Payment Service Banks (PSBs) in furtherance of its sustained efforts to improve the efficiency of the nation’s banking system operations.

The apex bank, in the framework published on Thursday, directed that the PSBs must operate mostly in the rural areas and unbanked locations and targeting financially excluded persons with not less than 25 percent financial service touch points in such rural areas.

In addition, the framework also required the PSBs to render monthly returns indicating the number of financially excluded/unbanked customers on-boarded during the month to which the returns relate and the number of access points deployed in the month, as well as active access points and the cumulative access points deployed in other to ensure monitoring and evaluation.

On the PSBs’ permissible activities, the regulatory monetary institution stated: “PSBs shall accept deposits from individuals and small businesses, which shall be covered by the deposit insurance scheme; Carry out payments and remittances (including inbound cross-border personal remittances) services through various channels within Nigeria; Sale of foreign currencies realized from inbound cross-border personal remittances to authorized foreign exchange dealers.

“Comply with provisions of the extant Foreign Exchange Regulations of the CBN; issue debit and pre-paid cards on its name; operate electronic wallet; render financial advisory services; invest in FGN and CBN securities; and carry out such other activities as may be prescribed by the CBN from time to time”, the CBN added.

The framework further provided for the non-permissible activities of the PSBs, stating that “the PSBs shall not grant any form of loans, advances and guarantees (directly or indirectly). They may lend to their employees in line with their employee loan policy, subject to the approval of their Board.

“They shall not accept foreign currency deposits; deal in the foreign exchange market except as prescribed; insurance underwriting; undertake any other transaction which is not prescribed by this Guidelines; accept any closed scheme electronic value (e.g. airtime) as a form deposit or payment; establish any subsidiary except as prescribed in the CBN Regulation on the Scope of Banking and Ancillary Matters, No 3, 2010”, it added.

To ensure strict compliance with the extant regulations, the apex bank stated that appropriate financial and administrative sanctions shall be imposed on erring PSBs and/or their principal officers, as provided for in relevant laws, regulations and guidelines.

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