News Column

New BDC Guidelines to Conserve Forex Reserves, CBN Tells Reps

July 17, 2014

Kingsley Ighomwenghian

The Central Bank of Nigeria (CBN), on Wednesday assured the House of Representatives that the guidelines on the regulation of Bureaux de Change (BDCs) released last month was part of efforts to conserving the nation's foreign reserves.

Addressing members of the House Committee on Banking and Currency in Abuja on Wednesday, CBN Governor, Godwin Emefiele, said during an interactive session that modifications became necessary, following observations that the current operations of the BDCs had deviated from the objectives for which they were initially lisensed.

He lamented that many operators were only interested in widening margins and profits from the foreign exchange market, regardless of prevailing official and interbank rates, adding that a recent cross-country survey of BDCS carried out by the CBN revealed that 93 per cent of the BDCs were in breach of the objectives and provisions of the guidelines.

He noted that many of the BDCs could either not be located or relocated without approval. He also said majority of the BDCs had no good accounting records, many had no adequate sales document and lacked audit trail.

He urged the legislators to support the CBN policy, as the apex bank is working towards having BDCs that are well-capitalised, properly structured and can effectively perform the roles of BDCs in the Nigerian economy.

Emefiele also used the occasion to debunk claims in certain quarters that the modifications were targeted at a certain section of the country and would lead to loss of jobs, citing successes recorded during the banks consolidation exercise of 2005 as indicators that the current move will succeed.

He added that the new policy, which entails a minimum capital requirement of N35 million and a mandatory cautionary deposit of N35 million is intended to ensure the emergence of well-capitalised and structured entities.

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Source: AllAfrica

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