The Central Bank of Nigeria (CBN) yesterday released new guidelines which permits Bureau de Change (BDC) operators to purchase up to $25,000 weekly from Authorised Dealer Banks (ADBs) to meet retail market demand.
In a circular signed by Dr. W. J. Kanya, the Acting Director of the Trade & Exchange Department at the CBN, the apex bank also outlined the compliance requirements to ensure transparency and curb potential forex misuse.
Under the new regulations, BDCs are expected to source for the allotted forex from a single authorised dealer bank per week as the restriction is aimed at preventing speculative activity and ensuring better oversight.
It added that any BDC found violating this rule will face appropriate sanctions from the CBN.
Also, authorised dealers must sell FX to BDCs at the prevailing rate in the Nigerian Foreign Exchange Market (NFEM) window to ensure consistency in pricing.
Similarly, the CBN has imposed a 1% cap on the margin which the BDCs can charge end-users above their purchase price., adding that the one per cent margin applies to all forex sold by BDCs, irrespective of its source.
To enhance market transparency, the CBN has made reporting requirements mandatory for both Authorised Dealer Banks and BDCs:
“Authorised dealers must submit weekly reports of their forex sales to BDCs in a specified Excel format to the CBN Trade and Exchange Department via teddmo@cbn.gov.ng. BDCs must render daily returns on forex purchases and sales (utilisation) through the Financial Institutions Forex Reporting System (FIFX). These measures will help the CBN track forex flows and prevent illicit activities in the currency market,” the CBN explained.
The circular also specifies that BDCs can only disburse purchased FX for specific transactions, with a maximum of $5,000 per transaction, quarterly. Which include business Travel Allowance (BTA)/Personal Travel Allowance (PTA), Overseas school fees and Overseas medical fees
Furthermore, the apex bank has warned that any Authorised Dealer Bank or BDC that violates these guidelines including forex diversion will face severe sanctions, including the suspension of their dealership license.
