The central bank of Nigeria (CBN) has decided to implement extensive policy changes that will improve the liquidity of the country’s foreign exchange market by prohibiting banks from doing international money transfer activities.
Fintech businesses will not be granted new IMTO licenses by the apex bank. The central bank did not, however, specify how this regulation would apply to fintech businesses that had previously been granted authorization to send money abroad.The bank also raised the application costs for International Money Transfer Operator (IMTO) permission to N10 million [$6,845] in accordance with the revised guidelines released on Wednesday.
The guidelines are an update to the original ones that were published in 2014. The new regulations also mandate that international IMTOs have a minimum operating capital of $1 million, while their indigenous equivalents must have the equivalent in naira.
Fintech businesses such as Flutterwave, LemFi, PagaTech, VFD, and Interswitch have been given international money transfer licences by Nigeria’s top financial authority in the past. It was unclear from the updated criteria if the current licenses would be cancelled. The IMTO approval renewal fee was fixed at N10 million per year by the CBN.
The new regulations are intended to “liberalise the foreign exchange market and ensure transparency,” according to the apex bank. It stated that commercial banks will be permitted to serve as middlemen for services related to international money transfers. The CBN lifted the limit on foreign exchange transactions in a different circular, allowing IMTOs to use the official market’s prevailing rate.
This week, the CBN announced new regulations aimed at enhancing liquidity in Nigeria’s erratic foreign exchange market and promoting remittances from the diaspora and international capital inflows. Following a sharp decline in the official naira currency versus the dollar, the bank instructed banks to reduce their foreign exchange exposure and sell any excess dollars.
Notwithstanding the Naira’s choice to float and its devaluation last year, the currency has
The CBN has been highlighting its efforts to reduce the backlog and making promises to do so early in the year in an attempt to regain public trust. The bank reiterated to Bloomberg this week that “fundamental issues that have hindered the effective operation of the Nigerian foreign-exchange markets” would be rectified and that the backlogs would be eliminated “within a short time.”