CBN Reveals Guidelines for BNCH Operations

The Central Bank of Nigeria has revealed in a statement, the new guidelines for Bank Neutral Cash Hubs operation across the country.

The apex bank revealed this update per the statement on its website which reveals that the guidelines are succinct in furtherance of its mandate to promote a sound financial system in Nigeria. The bank also said that the guideline was a collaborative effort with the Banker’s Committee to reduce cost and improve operational efficiency in the country’s cash management.

The statement on the CBN website reads in part: “The CBN, in collaboration with the Banker’s Committee, initiated the Nigerian Cash Management System, which seeks to reduce cost and improve operational efficiency in the country’s cash management value chain. One initiative towards the stated goal is the introduction of BNCH. BNCHs are cash collection centres to be established by registered 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 central bank also pointed out that these hubs would provide platforms for customers to make cash deposits and receive value irrespective of the bank with which the customers have their accounts domiciled.

“This guideline aims to provide minimum standards and requirements for BNCH registration and operations for effective supervision. The key objective is to reduce the risks and costs borne by banks, merchants and huge cash handlers in the course of cash management activities. It will also deepen financial inclusion and leverage on shared services to enhance cash management efficiency,” the bank said.

Investors King also gathered that according to the guidelines, a BNCH can carry out activities like receipt of Naira denominated deposits on behalf of financial institutions from individuals and businesses with high volumes of cash.

“It can also carry out high volume cash disbursement to members of the public on behalf of financial institutions, and any other activities that may be permitted by the CBN. But it is not permitted to carry out investing or lending activities, or receive, disburse or engage in any transaction involving foreign currency,” the statement reads.

It is quite interesting to note that this guideline is coming after an earlier request by the House of Representatives that was calling out to the Central Bank of Nigeria (CBN) to create rigid measures to regulate the use of Point of Sale (POS) business Operations hubs in Nigeria. The development by the CBN for BNCH is quite a welcomed one, however, we can only hope that close attention is paid to ensure that banks follow these laid down guidelines.