CBN issues final guidelines for banks’ cash collection centres

The Central Bank of Nigeria (CBN), has issued the final draft of guidelines for setting up Bank Neutral Cash Hubs (BNCHs).

This is coming two months after CBN first released an exposure draft for comments and review.

The final guideline which was published on its website on Thursday is titled ‘Guidelines for the registration & operation of Bank Neutral Cash Hubs in Nigeria’.

It explained in the guidelines that BNCHs were cash collection centres to be established by registered (licensed) processing companies or Deposit Money Banks based on business needs.

The CBN also said the hubs would be located in areas with high volumes of commercial activities and cash transactions.

It further stated that the hubs would provide a platform for customers to make cash deposits and receive value irrespective of the bank with which their account is domiciled.

“This guideline aims to provide minimum standards and requirements for BNCH registration and operations for effective supervision,” the CBN stated.

According to the CBN, the key objective of setting up the BNCH was to reduce the risks and cost borne by banks, merchants and huge cash handlers in the course of cash management activities; deepen financial inclusion, and leverage on shared services to enhance cash management efficiency.

The CBN also added that the BNCH’s duties included 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 might be permitted by the apex bank.

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.”

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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.

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