The Central Bank of Nigeria (CBN), has issued the final draft of guidelines for setting up Bank Neutral Cash Hubs (BNCHs). This is according to a recently released circular by the CBN.
Nairametrics reported when the CBN released an EXPOSURE DRAFT for comments and observations after which the apex bank released the final draft.
Bank Neutral Cash Hubs (BNCH) seeks to reduce costs and improve operational efficiency in Nigeria’s cash management value chain.
What the CBN is saying
The Nigerian Cash Management System (NCMS) was created by the Central Bank of Nigeria in collaboration with the Banker’s Committee, and it led to the creation of Bank Neutral Cash Hubs (BNCHs) to cut costs and increase operational efficiency in the Nigerian cash management value chain.
- CBN said, “BNCHs are cash collection centers to be established by registered (licensed) processing companies or Deposit Money Banks (DMBs) based on business needs. They will be located in areas with high volumes of commercial activities and cash transactions. The hubs will provide a platform for customers to make cash deposits and receive value irrespective of the bank with which their account is domiciled.”
- The Apex Bank stated that the BNCH may carry out the following: “Receipt of Naira denominated deposits on behalf of financial institutions from individuals and businesses with high volumes of cash; disbursement of Naira denominated withdrawals on behalf of financial institutions to individuals and businesses with high volumes of cash.; and any other activities that may be permitted by the CBN.”
- The guideline however prohibits BNCHs from “investing or lending activities; receive, disbursing or engaging in any transaction involving foreign currency; nor sub-contract another entity to carry out its operations”
- However, Only Deposit Money Banks (DMBs) and Cash Processing Companies (CPCs) are eligible to apply for licences for BNCHs.