The Central Bank of Nigeria (CBN) has issued guidelines for licensing and regulation of Payment Service Banks (PSBs) as it aims to enhance financial inclusion to small businesses, low-income households, and other financially excluded entities.
In a circular to PSBs on Thursday, the financial regulator said that despite several initiatives introduced, the inclusion rate remained below expectations.
It added that in collaboration with critical stakeholders in the digital financial ecosystem, the need to establish a guideline for the operations of the PSBs is crucial to enhance financial inclusion and stimulate economic activities at the grassroots through the provision of financial services.
“The National Financial Inclusion Strategy (NFIS) seeks to ensure that over 80 percent of the bankable adults in Nigeria have access to financial services by 2020. The CBN in collaboration with stakeholders launched the NFIS on 23rd October 2012 to reduce the exclusion rate to 20 percent by 2020.
“Despite several initiatives including the Introduction of Microfinance banking, Agent Banking, Tiered Know-Your-Customer Requirements, and Mobile Money Operation (MMO) in pursuit of this objective, the inclusion rate remains below expectation.
“Given the challenges to effective outreach to rural communities as well as the need to complement the services provided by other licensed entities, the CBN issues this regulation to provide for the licensing and operations of Payment Service Banks (PSBs) in Nigeria,” it added.
According to the CBN, the Payment Service Banks structure shall include; “Operate mostly in the rural areas and unbanked locations targeting financially excluded persons, with not less than 25% financial service touchpoints in such rural areas as defined by the CBN from time to time; enter into direct partnership with card scheme operators. Such cards shall not be eligible for foreign currency transactions; deploy ATMs in some of these areas, amongst others.
However, the apex bank revealed that the PSBs shall not grant any form of loans, accept foreign currency deposits, deal in the foreign exchange market or accept any closed scheme in electronic value as a form of deposit or payment.
The CBN stated that banking agents, telecommunications companies, retail chains, postal and courier service providers, mobile money operators, FinTech, and any other entity whose application is approved on merit are eligible to promote the new scheme.