CBN, Bankers Committee Introduces Bank Neutral Cash Hubs For Efficient Cash Management

…CBN Sets N1 Million Limit

The Central Bank of Nigeria (CBN) in collaboration with the Bankers’ Committee has introduced cash collection centres called Bank Neutral cash hubs.

This is to enable it to reduce cost and improve operational efficiency in the country’s cash management value chain.

This is according to a recently released circular titled, ”Guidelines for the registration & operation of Bank Neutral Cash Hubs (BNCH) in Nigeria.”

BNCHs (Bank Neutral Cash Hubs) are cash collecting centres that are set up by registered processing firms or Deposit Money Banks (DMBs) in response to business needs.

They’ll be in places where there are a lot of commercial operations and monetary transactions. Customers will be able to make cash deposits and receive value at the hubs regardless of which bank their account is held.

This guideline aims to provide minimum standards and requirements for BNCH registration and operations for effective supervision.

The BNCH can’t carry out investing or lending activities. Also, BNCH can’t receive, disburse, or engage in any transaction involving foreign currency.

More so, the apex bank has pegged the minimum transaction limit for corporate and individuals transacting with Bank Neutral Cash Hubs at N1m and N500,000 respectively.

It said, “The threshold for eligible transactions at a BNCH shall be as follows: A minimum transaction value of N500,000 for individuals; a minimum transaction value of N1m for corporate entities.”

It said one initiative towards the goal is the Bank Neutral Cash Hubs. The CBN said, “BNCHs are cash collection centres to be established by registered processing companies or Deposit Money Banks based on business needs.

The Deposit Money Banks (DMBs) and Cash Processing Companies (CPCs) are eligible to apply for the BNCH.

The BNCH would be able to receive naira denominated deposits on behalf of financial institutions from individuals and businesses with high volumes of cash.

CBN has the right of access to the BNCH facility for the purpose of compliance monitoring of activities and examination of records/books.

BNCH shall comply with the reporting requirements and timelines specified in the Cash Activity Reporting Portal (CARP) Industry Handbook by providing data and information.

The apex bank said one of the key objectives for setting up the BNCH is to reduce the risks and costs borne by banks, merchants, and huge cash handlers in the course of cash management activities; deepen financial inclusion; and leverage on shared services to enhance cash management efficiency.

It added, “A BNCH may carry out the following: Receipt of naira denominated deposits on behalf of financial institutions from individuals and businesses with high volumes of cash.

“High volume cash disbursement to members of the public on behalf of financial institutions; any other activities that may be permitted by the CBN.

“BNCH shall not carry out investing or lending activities; receive, disburse, or engage in any transaction involving foreign currency; undertake any other transaction which is not prescribed by this guideline; sub-contract another entity to carry out its operations; any other activities that may be prohibited by the CBN.”