Nigeria: CBN to Licence Payment Service Banks to Boost Financial Inclusion

Oct 2018
Nigeria, October, 08 2018 - To further deepen financial inclusion in Nigeria and achieve the 2020 target, the Central Bank of Nigeria (CBN) said it would be granting operating licence to Payment Service Banks( PSBs) which would operate in rural areas and unbanked areas.

The apex bank at the weekend released an exposure draft on the guidelines for licensing and regulation of Payment Service Banks (PSBs) with a minimum capital base of N5 billion and a N2 million licensing fee. 

The PSBs are meant to enhance financial inclusion in rural areas by increasing access to deposit products and payment as well as remittance services to small businesses, low income households and other entities through high volume, low value transactions in a secured technology driven environment. Nigeria plans to achieve at least 80 per cent financial inclusion by the year 2020 although statistics showed that the level of penetration of financial services was still low. According to the chairman of board of Enhancing Financial Innovation and Access (EFINA) , Mr Segun Akerele , about 41 million Nigerians were financially excluded with the bulk of it coming from the north- west, north- east and north -central. He noted that this formed the basis of targeting the areas that were yet to feel the impact of financial services.

“In Nigeria today, we have 41 million people that are excluded and we have a target of 12 per pent exclusion by 2020,” he added. CBN’s director, Financial Policy and Regulation department, Kevin Amugo, in a letter to banks,telecommunications companies, mobile money operators, banking agents and the Nigerian Communication Commission(NCC) said the PSB licensing was in its efforts at promoting financial inclusion and enhance access to financial services for low income earners and unbanked segments of the society through leveraging on technology.“In view of the challenges to effective outreach to rural communities as well as the need to complement the services provide by other licensed entities, the CBN issues this draft regulation to provide for the licensing and operations of PSBs in Nigeria.

“PSBs are expected to leverage on mobile and digital services to enhance financial inclusion and stimulate economic activities at the grassroots through the provision of financial services. PSBs will also enable high volume low value transactions in remittances services, micro savings and withdrawal services in a secured technology driven environment.” According to the draft guideline, PSBs asides from their basic functions were also to establish ATMs in the areas they operate, be at liberty to operate through banking agents, use other channels including electronic channels to reach out to its customers, establish coordination centers in clusters of outlets to superintend and control the activities of the various access points and banking agents.

Analysts and operators in the payment space have called for a non bank – led mobile money system to tap into the database of the telecommunications industry in achieving financial inclusion.

Source : Leadership

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