CBN Set to grant more licence for Payment Service Banks (PSBs) with Capital Rules

The Central Bank of Nigeria (CBN) set a minimum capital base of N5billon as the CBN is set to grant more licences to Payment Service Banks (PSBs). This could deter telecoms firms and some other potential new entrants to the digital financial services sector.

In a circular on Monday, the apex bank said telecom firms, banking agents, retail chains and postal services could apply for licences to become payment banks, following these terms;

they must set up a separate company for it with a minimum capital of N5 billion and

operate as an independent entity from their operations.

The CBN has granted three licences so far, one to 9PSB, a unit of local telecom firm, 9mobile, and two others.

The Federal Government  wants to open up its digital financial services sector, which will help millions who do not have bank accounts. But regulation has been caught up with intense lobbying from lenders seeking to protect their turf in the wake of intense competition and weakening asset quality.

MTN, Nigeria’s biggest telecoms firm, which is yet to receive approval, last year launched a mobile money transfer service, targeting those without bank accounts in a bid to secure the central bank’s approval for a payments licence.

It is estimated that more than half of Nigeria’s population of 180 million do not have a bank account.

The success of mobile money in east Africa has convinced investors and the industry that financial services are the next growth area for the telecoms sector, where prices for basic services are falling.

Analysts say the licensing cash requirement risks putting off telecom companies. When the CBN  issued preliminary guidelines for payment banks in 2018 for discussion, telecom companies argued that they are not banks and do not need a capital base.

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