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CBN introduces Bank Neutral Cash Hubs (BNCH) to reduce cost borne by banks, merchants and huge cash handlers

In a bid to further promote a sound financial system in Nigeria, the Central bank of Nigeria (CBN), in collaboration with Banker’s Committee on Monday introduced cash collection centres known as Bank Neutral Cash Hubs (BNCH), which seeks to reduce cost and improve operational efficiency in the country’s cash management value chain.

The apex bank, in a recently released circular titled, ”Guidelines for the registration & operation of Bank Neutral Cash Hubs (BNCH) in Nigeria.” stated that the collection centres will be established by registered cash processing companies (CPCs) or Deposit Money Banks (DMBs) based on business needs. These two are eligible promoters of BNCH.

It further stated that 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, and they will be located in areas with high volumes of commercial activities and cash transactions.

The key objective of setting up Bank Neutral Cash Hubs (BNCH) is 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.

Financial Requirements for approval to operate as BNCH

According to the CBN guidelines, the financial requirements for an approval to operate as BNCH, which may be amended by the CBN as it deems necessary, are as follows: Non-refundable application fee of N100,000 and Non-refundable approval fee of N500,000.

Service charges, fees and commissions shall be subject to CBN’s regulatory approval, the guidelines stated.

Deposit and withdrawal limit at the cash hubs

On deposit and withdrawal limit at BNCH, the guidelines allows a minimum transaction value of N500,000 for individuals and minimum transaction value of N1,000,000 for corporate entities.

Eligible promoters of BNCH

As earlier stated, the eligible promoters according to the guidelines are Cash Processing Centres (CPCs) and Deposit Money Banks (DMBs). They are permitted to carry out the following activities:

  • Receipt of Naira denominated deposits on behalf of financial institutions from individuals and businesses with high volumes of cash
  • High volume cash disbursement to members of the public on behalf of financial institutions
  • Any other activities that may be permitted by the CBN.

Non Permissible activities include

The guidelines noted that CPCs and DMBs on no account should carry out any of the following:

  • Investment or lending activities
  • Receive, disburse, or engage in any transaction involving foreign currency
  • Undertake any other transaction which is not prescribed by the guideline
  • Sub-contract another entity to carry out its operations
  • And any other activities that may be prohibited by the CBN.

How to apply for BNCH

According to the guidelines, prospective promoters of BNCH (CPC or DMB) seeking to operate a BNCH shall apply in writing to the Director, Currency Operations Department (COD) and submit the following documents with the application:

  • A valid DMB license or a valid proof of CPC registration issued by the CBN
  • A non-refundable application fee of N100,000 only, or such other amount as the CBN may specify, in a bank draft payable to the CBN
  • Evidence of board resolution approving the application duly signed by the Chairman and Secretary of the board of the CPC or the DMB.

Other requirements include detailed business plan or feasibility report which shall, at a minimum, include:

  • Objectives of the BNCH
  • Services to be rendered by the BNCH
  • Justification for the application
  • Organizational structure, showing functional units, responsibilities, reporting relationships, list of proposed staff in charge of BNCH operations/services, technical Services agreement (where applicable)
  • Certificate of Incorporation and certified true copies of other incorporation documents of the CPC or the DMB.

Monitoring

CBN shall have right of access to the BNCH facility for the purpose of compliance monitoring of activities and examination of records/books.

BNCH shall comply with the reporting requirements and timelines specified in the Cash Activity Reporting Portal (CARP) Industry Handbook by providing data and information not limited to:

  • Total number of customers and cumulative value and volume of transactions to their name;
  • Volume and value of withdrawal and deposit transactions;
  • Incidents of fraud, theft or robbery;
  • Nature and number of customer complaints and remedial measures taken. Any other report as may be required by the CBN.

BNCH shall include in its annual reports and accounts, all activities of its operations.

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