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  • Business - Economy
  • Updated: May 25, 2021

CBN Demands N4bn Escrow and Shareholder Requirements From Fintechs

CBN Demands N4bn Escrow and Shareholder Requirements From Fi

Nigeria's Central Bank has turned up the heat on the nation's growing fintech business sector with a new capital requirement policy.

The apex bank on Monday released a new set of requirements which was seen on its website by Allnews, stating that payment firms must have an escrow of refundable N2bn paid into the CBN’s PSP share capital deposit account.

The requirements also state that the deposit for escrow must be paid in full (one lump sum) and must be made in the name of the company applying for a license (not an individual or related company).

cbn requirementIt added that a non-refundable application fee of N100,000, and a licensing fee of N1 million have to be paid before a final license is issued.

The list doesn't end there, as the apex bank is making other hefty requirements based on the fintech license category: For Mobile Money Operator and Switching & Processing license, CBN demands that a firm must have another N2 billion shareholders’ funds unimpaired by losses, while the total for Payment Solution Services was pegged at N250 million and Payment Solution Services Provider & Payment Terminal Service Provider was N100 million. However, the Super Agent license retained its N50 million shareholder fund requirement.

The CBN has also stated that escrowed funds be invested in treasury bills, subject to the availability of treasury instruments, which would be refunded accordingly.

Last month, the regulator restricted fintechs and other non-bank companies from offering BVN verification service, which had previously been the cheapest means of KYC for these firms.

Nigeria, which was recently ranked at 131 on the World Bank Group's ease of doing business report, has a fast-growing fintech industry that has attracted heavy investments from both local and international investors. The increasingly unfavourable business climate, however, might be the undoing of promising sectors such as this.

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