236 bureau de change owners lose licences…Microfinance banks may follow soon

Operating licences of 236 out of about 730 bureaux de change operating in Nigeria have been withdrawn by the Central Bank of Nigeria (CBN). This is even as operators of MFBs have remained jittery over rumours that most of them may soon lose their licences too, as a result of another impending clean-up exercise by the CBN.
In a circular obtained from the bank’s website and signed by the Director, trade and exchange department, CBN, Batari Musa, with reference number TED/FEM/FPC/GEN/01/041 the apex regulatory institution stated: “Consequently, all Authorized Dealers/Buyers and the general public are advised that with effect from January 14, 2013, any foreign exchange transactions, including sale to and purchase from these BDCs as well as transfer of funds through them and or on their behalf is illegal.”
In an effort to ensure compliance with foreign exchange regulations by BDCs, the apex bank carried out spot-checks on several BDCs in 2012 and infractions ranging from non-compliance with foreign exchange regulations to violations of anti-money laundering laws that were identified in their operations.
Daily Sun learnt that some of the infractions which led to the disciplinary action, which was approved by the CBN governor, were that the firms did not have basic anti-money laundering procedure; they effected change of ownership in their institutions without the CBN approval; they sold forex beyond the authorised limits to individuals; some of them had relocated without informing the CBN; and that they sold forex without adequate documentation. Some of the affected Bureaux De Change companies are:Beeview Travels Nig. Limited BDC, BTS securities Limited (BDC), A.F.A. BDC, A.I.A BDC, ACCLIM BDC, African Shelta BDC, All Africa BDC, SHA’ADA FAS BDC, SHOLAWA BDC, SABON RUWA BDC among others.
Daily Sun findings revealed that in February last year, CBN revoked licences of 37 BDC firms while the apex bank placed five of them on indefinite suspension, 24 of the affected BDCs on one month suspension (13 located in Abuja and 11 located in Lagos); eight were suspended for three months. The CBN, which gave the hint of imminent shake-up in December last year, said the non-compliance with the Revised Microfinance Policy Framework still remained a possible ground for operators to lose licences early in the year 2013, in view of the compliance deadline of December 31, 2012, it gave to MFBs.
While Daily Sun checks reveal that most of the MFB operators are yet to comply with the capitalization requirement the regulator, in a circular, signed by the Director, Other Financial Institutions Supervision Department, CBN, Mr. Olufemi Fabanwo, reminded the MFBs that failure to comply with the Revised Microfinance Policy Framework was a ground for revocation. The CBN said in the circular, “This is a reminder to all directors and shareholders of all microfinance banks on the deadline of December 31, 2012, for compliance with the Revised Microfinance Policy Framework, particularly in respect of the capital requirements for each category of MFBs and existing branches/cash centres.”
The CBN gave microfinance banks three options to comply with the revised policy guideline. One option is to raise fresh capital to bring the capital base to the stipulated minimum of N100million shareholders’ fund unimpaired by losses, to become a State Microfinance Bank under the revised framework. The second option is to obtain regulatory approval of the CBN to close all existing branches and cash centres and remain a Unit Microfinance Bank with a minimum capital requirement of N20million shareholders funds unimpaired by losses, while the third option is to embark on mergers and acquisition, such that the consolidated capital base of the combined institutions meets the stipulated capital requirement of a state or national microfinance bank.
SUN