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BDC Regulation: CBN cash limits, no street trading and other planned policies explained

1 month ago   MARKET NEWS   Lagos   646 views Reference: 310

Location: Lagos


The Central Bank of Nigeria (CBN) is planning on making major changes on how Bureau De Change (BDCs) will operate in Nigeria. Let's take a closer look at what these changes could mean in real life:

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1. No Street Trading:

Imagine you want to exchange your dollars for Naira at a local BDC with operators and agents beckoning you in the street. The CBN is suggesting that these businesses shouldn't be operating on the streets anymore. Instead, they should do their business in an office.

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2. Cash Limits:

You walk into the currency exchange office, hoping to get Naira for your dollars. The CBN wants to put a limit on how much cash they can give you. So, even if you have a lot of dollars, they might only give you up to $500 to Naira in cash. Anything more than that, and they would prefer to send the money directly to your bank account.

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3. Permitted and Not Permitted Activities:

These currency exchange businesses are allowed to do certain things. For example, they can get foreign currency from approved sources and sell foreign currency following specific rules. However, there are things they are not allowed to do, like selling on the streets, managing bank accounts, taking deposits, giving loans, and dealing with precious stones and metals.

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4. Reporting Large Transactions:

Let's say someone comes into the currency exchange office with a large amount of foreign currency, like more than $10,000. The CBN wants the BDC to ask where that money came from and report it to them. This is to make sure everything is legal and follows the rules.

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5. Digital Transfers and Prepaid Cards:

If you're buying foreign currency and it's more than $500, the CBN prefers that the currency exchange business transfers the money directly to your Nigerian bank account. If you're not from Nigeria, they might give you a special prepaid card for Nigerian Naira. But, there are limits on how much you can get, and they have to follow certain rules to make sure everything is okay.

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In a nutshell, these possible changes are aimed at making sure currency exchange businesses follow the rules, keep things transparent, and discourage street trading. It's like giving them a rulebook to follow so that everything is fair and legal for everyone involved.