Banks to compete with POS operators, as CBN okays them to set up cash centres outside of banking halls

Deposit money banks (DMBs) and processing companies in the financial industry have been given the go-ahead to establish deposit and withdrawal centres outside the banking hall across the country.

The deposit and withdrawal centres will operate as a neutral firm irrespective of the bank that established them, which means they will cater to non-account holders as well, according to a statement on Central Bank of Nigeria (CBN) website, dated March 14, 2022.

These centres will be known as Bank Neutral Cash Hubs (BNCH), and interested deposit money bank or processing company willing to set up theirs will have to pay N100,000 for application fee and N500,000 for non-refundable approval fee.

Dos and Don’ts of BNCH

Bank Neutral Cash Hubs, which would be located in areas with high commercial activities and cash transactions, are not allowed to transact investment and lending services.

Operators of BNCH are also not allowed to transact in foreign currency, which notifies deposit or withdrawal in foreign currency. They are also barred from sub-contracting the BNCH operation to another entity.

Meanwhile, BNCH operators maximum withdrawal or deposit transactions for individuals is capped at N500,000, while that for companies is limited to N1 million and below.

What CBN is saying about BNCH?

The financial regulator said the initiative for the Bank Neutral Cash Hubs was to cut the risk and cost of cash management among banks, merchants and other cash handlers in the country.

“The key objective of setting up Bank Neutral Cash Hubs (BNCH) is to reduce the risks and cost borne by banks, merchants and huge cash handlers in the course of cash management activities; deepen financial inclusion; leverage on shared services to enhance cash management efficiency.” CBN said.

“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.” the statement further explains.

With the approval, the BNCH would now compete with Point of Sales (POS) outlets around the country which provide cash withdrawal, transfers and deposit services for Nigerians.