CBN Grants Approval-in-Principle to Three PSBs

Isaac Okorafor
Isaac Okorafor

Obinna Chima

The Central Bank of Nigeria (CBN) has granted Approval-in-Principle (AIP) to three Payment Service Banks (PSBs).

The three institutions are Hope PSB, Money Master PSB and 9PSB.

The central bank explained that the approvals were line with its objective of enhancing financial inclusion and the development of the payment system by increasing access to deposit products and payments services through a secured technology-driven environment.

This was disclosed in a statement by the Director, Corporate Communications Department of the CBN, Isaac Okorafor, who explained that the approval in principle was part of the processes the institutions had to fulfil in order to be granted license to operate as fully-fledged PSBs.

According to Okorafor, the decision of the CBN to issue the AIP to the applicants followed the institutions’ satisfaction of documentation and other laid down conditions.

Sequel to the issuance of the AIP to the three banks, he said they were expected to submit their respective applications for the grant of a final licence, not later than six months after the AIP.

Speaking further, he disclosed that the CBN code of corporate governance for banks would also be applicable to the PSBs.

The CBN had in the last quarter of 2018, unveiled the operational guidelines for PSBs. The move was in furtherance of the Bank’s mandate of promoting a sound financial system and enhancing access to financial services for low income earners and unbanked segments of the society.

The PSBs are to operate mostly in the rural areas and unbanked locations, targeting financially excluded persons, with not less than 25 per cent financial service touch points in such rural areas as defined by the CBN from time to time, the guidelines said.

According to the CBN, the key objective of setting up PSBs was to enhance financial inclusion by increasing access to deposit products and payment/remittance services to small businesses, low-income households and other financially excluded entities through high-volume low-value transactions in a secured technology-driven environment.

They are to also enter into direct partnership with card scheme operators but such cards shall not be eligible for foreign currency transactions.

In addition, they are to deploy ATMs in some of these areas; deploy Point of Sale devices and be at liberty to operate through banking agents (in line with the CBN’s Guidelines for the Regulation of Agent Banking and Agent Banking Relationships in Nigeria).

Accordingly, PSBs are envisioned to facilitate high-volume low-value transactions in remittance services, micro-savings and withdrawal services in a secured technology-driven environment to further deepen financial inclusion and help in attaining the policy objective of 20 per cent exclusion rate by 2020.