NIGERIA: CBN directs PSBs to activate rural banking

The Central of Nigeria (CBN) has directed Payment Service Banks (PSBs)  to operate mostly in the rural areas and unbanked locations targeting financially excluded persons.

The supervisory framework for Payment Service Banks released by the CBN for the sector stated that PSBs should have  not less than 25 per cent financial service touch points in such rural areas as defined by the apex bank from time to time.

They are also to  enter into partnership with card scheme operators. Such cards would not be eligible for foreign currency transactions; they can also deploy ATMs in some of these areas; deploy Point of Sale devices and be at liberty to operate through banking agents.

The PSBs have also been authorised to roll out agent networks with the prior approval of the CBN; use other channels, including electronic platforms to reach-out to its customers and establish coordinating centres in clusters of outlets to superintend and control the activities of the various financial service touch points and banking agents. 

The CBN also authorised the PSBs to accept deposits from individuals andsmall businesses, which shall be covered by the deposit insurance scheme; carry out payments and remittances (including inbound cross-border personal remittances) services through various channels within Nigeria; sale of foreign currencies realised from inbound cross-border personal remittances to authorised foreign exchange dealers.

The CBN said the PSBs can also issue debit and pre-paid cards on its name; operate electronic wallet; render financial advisory services; and invest in Federal Government of Nigeria  and CBN securities.

CBN said the PSBs were licensed to enhance access to financial services for low income earners and use technology to reach Nigerians in remote places where commercial banks find it difficult to operate.

According to the CBN guidelines, the PSBs are expected to offer smaller-scale banking operations and the absence of credit risk and foreign exchange operations.

In addition to operating current and savings accounts, they can also offer payments and remittance services, issue debit and prepaid cards, deploy Automated Teller Machines (ATMs) and other technology-enabled banking services to the people, the majority of whom cannot be reached by the conventional banks.

The PSBs are to facilitate high volume low-value transactions in remittance services, micro-savings and withdrawal services in a secured technology-driven environment to further deepen financial inclusion.

With N5 billion minimum capital requirement, the apex bank also  authorised PSBs to render quarterly returns indicating the number of financially excluded customers on-boarded during the quarter to which the returns relate.

PSBs would be required to interface with the Nigeria Inter-bank Settlement System (NIBSS) platform to promote interconnectivity and interoperability of operations within the banking system, it said.

The supervisory framework for Payment Service Banks released by the CBN authorised the PSBs to accept deposits from individuals and small businesses, which shall be covered by the deposit insurance scheme; carry out payments and remittances (including inbound cross-border personal remittances) services through various channels within Nigeria.

The framework says the operators are expected to leverage on technology to provide services that would be easily accessed by the unbanked population and those who are in hard-to- reach areas of the country. 

The framework focuses on corporate governance, risks management of the PSBs, and safety of funds to the consumers of the Payment Service Banks’ products. 

This Framework also aims to ensure that sound risk management practices are embedded in the operations of the PSBs. 

The PSBs are required to comply with relevant extant regulations and CBN’s prudential guidelines and circulars which are issued periodically. 

SOURCE: THE NATION / Collins Nweze