CBN deepens financial inclusion with PSB supervisory guideline

The Central Bank of Nigeria (CBN) has released a supervisory framework for payment service banks (PSBs) to streamline their operations and deepen financial inclusion.

The document, released yesterday, is a follow-up to the licensing and regulation blueprint issued in 2018 and revised last year.

The document covers the structure of the market, permissible/non-permissible activities, ownership/licensing, corporate governance, shared services and sanctions.

“This framework hereby provides a set of regulations that are targeted at streamlining the operations of payment service banks, ensuring transparency in their operations as well as ensuring adequate customer protection.

“The framework focuses on corporate governance, risk management of the PSBs and safety of funds to the consumers of the payment service banks’ products. This framework also aims to ensure that sound risk management practices are embedded in the operations of the payment service banks,” the document stated.

The apex bank said PSBs would be required to comply with relevant extant regulations, prudential guidelines and circulars issued periodically.

The regulator has, through the framework, mandated operators to deploy at least 25 per cent of their services to rural areas to be defined by the regulatory body from time to time and other under-banked areas. PSBs will also need to deploy automated teller machines (ATMs) and point-of-sale (PoS) centres to the areas.

It has also compelled the operators to conform with best practices with respect to data storage, security and integrity as their services are technology-driven.

By the template, operators of PSBs are banned from among others granting loans/advances/guarantees, accepting deposits in foreign currencies, underwriting risks, establishing any subsidiary except as prescribed in the CBN Regulation on the Scope of Banking and Ancillary Matters.

The bank also spelt out the qualifications and process of appointing board members and top management staff to “ensure sound corporate governance culture”, adding that provision of the Company and Allied Matters Act (2019) would apply.

“There shall be an annual appraisal of the board, its committees, chairman and individual directors covering all aspects of the boards’ structure, composition, responsibilities, processes and relationships or as may be prescribed by the CBN from time to time. The Board appraisal shall be conducted by an Independent Consultant with adequate experience, knowledge and competence. The report of the annual Board appraisal shall be forwarded to the CBN by March 31st following the end of every accounting year and be presented to shareholders at the AGM,” it stressed.

On know your customer (KYC) requirement, it started: “A PSB shall identify and take reasonable steps to verify the identity of a beneficial-owner, using relevant information or data obtained from a reliable source to satisfy it that it knows who the beneficial-owner is.”