The Central Bank of Nigeria (CBN) has stated that it will increase surveillance of Bureau De Change Operators (BDCs) operations to ensure compliance with regulations and to detect any potential abuses or irregularities in the Nigerian FX market.
The CBN Governor, Olayemi Cardoso, stated this at the recently concluded Monetary Policy Committee (MPC) which held in Abuja.
Speaking on the proposed guidelines for the operation of BDC businesses in Nigeria, Cardoso said that the CBN is concerned with the rising proliferation of BDCs, with thousands of them operating, each with varying interests.
He noted that some individuals may have obtained BDC licenses with the intention of exploiting loopholes in the foreign exchange market. “I am sure you will all agree with me that this situation is really worrying and arguably no longer serves the interests of those who it was meant to protect or reach out to.
Too many people had gone into that sector and as at last count, I believe we had over 5000 BDCs going up to 6000 which had different interests depending on where they saw themselves. Do not forget that at some point in time, BDC was used strictly with intention by many who applied for these licenses to take advantage of the different windows in the foreign exchange market and in the process arbitraged the system on an ongoing basis”.
He stated that to bring about sanity in the FX market, the apex bank will place much emphasis on the use of technology in BDC operations and increased surveillance and monitoring of their operations.
“The whole concept of surveillance and monitoring is going to be something that the CBN is going to incredibly strengthen, and we hope it will be able to increase competition for those who are genuine, and competition eventually should drive down prices and every Nigerian should benefit from it”, Cardoso said.
Whilst noting the guidelines are presented as an exposure draft and not finalized, the CBN Governor, said that the draft is open for feedback from stakeholders, adding that the goal is to gather input from as many people as possible to refine the guidelines.
It will be recalled that the CBN recently proposed a substantial increase in the capital requirements for BDC operators.
The new capital requirement now stands at N2 billion, up from the previous N35,000.
The revised guidelines, unveiled by the CBN, introduce a tiered system categorizing BDC operators into tier 1 and tier 2 categories. Tier 2 BDCs face a capital requirement of N500 million, representing a more than 10-fold increase from the previous baseline.
Moreover, the mandatory caution deposit for both tier 1 and tier 2 operators has been significantly raised to N200 million and N50 million, respectively, up from the initial N35,000 requirement.
In addition to the capital requirements, the CBN has also adjusted the application fees, license fees, and annual fees for BDCs.

SOURCE: THESUN