CBN announces guidelines for establishing payment service holding companies in Nigeria

The Central Bank of Nigeria (CBN) has announced guidelines for the establishment and regulation of Payments Service Holding Companies (PSHCs) in Nigeria.

This was contained in a circular issued by CBN’s Director, Payments System Management Department, Mr Musa Jimoh, on Tuesday.

Jimoh directed payments service providers, deposit money banks and other financial institutions to take cognizance of new license categorization for the Nigerian payments system.

He called on all stakeholders to guarantee strict compliance with the guidelines and all other regulations.

Jimoh added that no PSHC is allowed to borrow from the Nigerian banking system for the purpose of capitalising itself or any of its subsidiaries.

According to him, promoters of a PSHC shall be required to submit a formal application for the grant of a licence.

He, however, said the application process will be in two phases: approval-in-principle (AIP) and a final licence.

The circular reads, “This arrangement would prevent commingling of activities, facilitate management of risks and enable the Central Bank of Nigeria to exercise adequate regulatory oversight on all the companies operating within the Group (PSHC).

“Not later than six (6) months after obtaining the AIP, the promoters of a proposed PSHC shall submit an application to the CBN for the grant of a final licence.

“The application shall be accompanied with a non-refundable licensing fee of N5,000,000.00 (Five Million Naira only), or such other amount that the CBN may specify from time to time, payable to the Central Bank of Nigeria by electronic transfer.”

“PSHC shall be non-operating, existing solely to carry out investment in approved subsidiaries without engaging in the day-to-day management and operations of subsidiaries.

“It shall have a board size of between 5 and 10 or as determined by applicable CBN Corporate Governance Guidelines.”

According to the circular, the capital requirement to apply for an AIP is, “a non-refundable application fee of N1,000,000.00 or such other amount that the CBN may specify from time to time; payable to the Central Bank of Nigeria, through electronic transfer.

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