Connect with us

Business

CBN outlaws special treatment for payment service banks

Published

on

Nigeria saved $21bn in food import since 2015 -CBN

The Central Bank of Nigeria (CBN) has barred parent companies or any other associated entities of Payment Service Banks (PSBs) from providing preferential treatment, which nullifies fair competition, to its subsidiaries.

PSBs are a new category of banks with smaller scale operations and absence of credit risk and foreign exchange operations.

PSBs can also offer payments and remittance services, issue debit and prepaid cards, deploy automated teller machines and other technology-enabled banking services in an effort to drive financial inclusion and bring banking services closer to the unbanked population.

The apex bank move was contained in a circular issued to PSBs on Thursday titled ‘Guidelines for licensing and regulation of Payment Service Banks in Nigeria,’ and signed by Kevin Amugo, its Director of Financial Policy and Regulation Department.

It said it reviewed the guidelines to update a circular issued on 26the October 2018 in reaction to market developments since its first issuance.

A parent company or any other related entity of a PSB, which provides services to its PSB, must extend similar services to other entities on the same terms and conditions by ensuring all intra-group transactions were at arm’s length, the regulator said.

Read also: CBN to resume forex sales to bureaux de change on 31st August

“A parent company or any other related entity of a PSB is prohibited from offering any preferential treatment, which negates fair competition, to its subsidiary.

“Preferential treatment by a parent company or any other related entity shall, among others, include precluding its subsidiary’s competitor from using its infrastructure or services.

“Offering lower quality of service to its subsidiary’s competitors; offering such infrastructure or services at differential pricing; precluding any specific infrastructure or service as may be prescribed by the CBN from time to time,” the circular said.

It went further to say that the parent or related entities of a PSB must not be involved in discriminatory or differential pricing or services offered other PSBs or CBN-licensed institutions.

The CBN however retained the minimum capital of PSBs at N5 billion.

Join the conversation

Opinions

Support Ripples Nigeria, hold up solutions journalism

Balanced, fearless journalism driven by data comes at huge financial costs.

As a media platform, we hold leadership accountable and will not trade the right to press freedom and free speech for a piece of cake.

If you like what we do, and are ready to uphold solutions journalism, kindly donate to the Ripples Nigeria cause.

Your support would help to ensure that citizens and institutions continue to have free access to credible and reliable information for societal development.

Donate Now

Investigations