Connect with us

Hi, what are you looking for?

Business & Economy

CBN sets N5bn capital base for mobile money licences

THE Central Bank of Nigeria (CBN) said it will grant more licences for payment service banks but set a minimum capital base of N5 billion ($13 million) which could deter telecoms firms and some other potential new entrants to the digital financial services sector.

CBN in a circular seen on Monday said that telecom firms, banking agents, retail chains and postal services could apply for licences to become payment banks. To do so they must set up a separate company for it with a minimum capital of N5 billion and run it as an independent entity from their existing operations.

The bank has granted three licences so far to 9PSB, a unit of local telecom firm, 9mobile, and two others.

Nigeria wants to open up its digital financial services sector, which will help millions of Nigerians who do not have bank accounts. But regulation has been caught up with intense lobbying from lenders seeking to protect their turf in the wake of intense competition and weakening asset quality.

MTN, Nigeria’s biggest telecoms firm, which is yet to receive approval, last year launched a mobile money transfer service, targeting those without bank accounts in a bid to secure the Central Bank’s approval for a payments licence.

More than half of Nigeria’s population of 180 million do not have a bank account.

The success of mobile money in east Africa has convinced investors and the industry that financial services are the next growth area for the telecoms sector, where prices for basic services are falling.

But the licensing requirement in Nigeria risks putting off telecom companies. When the central bank issued preliminary guidelines for payment banks in 2018 for discussion, telecom companies argued that they are not banks and do not need a capital base.

The central bank said in its circular that it could ask payment banks to recapitalise for specific risks.

Payment banks should operate mostly in rural areas and unbanked locations, accepting deposits from individuals and small businesses, the central bank said. They cannot grant loans, it said.

($1 = 380.70 naira)

Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

Advertisement

You May Also Like

Opinion

By Bola Aina   In spite of the prevailing harsh time, which is projected not to subside soon, MultiChoice announced new rates for its...

Business & Economy

There has been a significant slash in the cost of owning luxury apartments and terraces in the Ikoyi area of Lagos, one of Africa’s...

Interview

Captain Emmanuel Iheanacho, a foremost Nigerian mariner, Shipowner, former Minister of Interior and Chairman of Integrated Oil and Gas Limited spoke with journalists in...

News

Chidi Ogbuokiri Worried by Federal Government’s delay in dredging the Oseakwa Seaport (Orashi River Port) in Ihiala Anambra State, a nonprofit organisation, New Era...