The Central Bank of Nigeria (CBN) has released a regulatory framework for agent banking operations, which includes several restrictions to mitigate risks in the financial sector.
The guideline was announced in a circular titled Exposure Draft of the Regulatory Framework for Agent Banking in Nigeria, signed by Musa I. Jimoh, the director of the Payments System Management Department.
In the 31-page document, the CBN dedicated Section 8.3 to outline prohibited activities for agents.
A closer look at some of the activities banned One of the key restrictions in the guideline is that agents must not use the purchase option on PoS terminals for cash-in and cash-out transactions,
The CBN has also warned agents against transactions where a receipt or acknowledgement cannot be generated. In addition to the abovementioned restrictions, the circular prohibits agents from conducting transactions in foreign currency.
Agent banking is a financial inclusion service that aims to extend the reach of retail banking services to all segments of the population, especially residents of rural areas.
The service providers include First Monie, EcoBank Express, UBA Moni, Zenith Mobile Money, and others. The CBN has observed that the agent banking initiative has led to the proliferation of financial service agents across Nigeria.
Consequently, significant and growing portion of financial transactions is now conducted through agents.
Complete list of activities prohibited for agent banking
1. Operate or carry out any transaction when there is a communication failure with the Financial institution (FI).
2. Carry out a transaction where a receipt or acknowledgement cannot be generated.
3. Charge customers’ fees outside the regulated fees regime.
4. Give any guarantee.
5. Offer banking services on its own accord.
6. Continue with the agency business when it has a proven criminal record involving fraud, dishonesty, or any other financial impropriety.
7. Provide, render, or hold itself out to be providing or rendering any banking service which is not specifically permitted in the contract.
8. Open accounts, grant loans or carry out any appraisal function for purposes of opening an account or granting of a loan or any other facility except as may be permitted by any other written law to which the agent is subject.
9. Undertake cheque deposit and encashment of cheques.
10. Transact in foreign currency.
11. Provide cash advances.
12. Be run or managed by FI’s employee.
13. Sub-contract another entity to carry out agent banking on its behalf except where there is a super-agent structure in place.
14. FI may in the contract document specify other activities, which the agent is prohibited from undertaking.
15. Accept deposit or allow withdrawal above an amount which shall be prescribed from time to time, by the Bank.
16. Use the wrong option for transactions e.g., Agents shall not use purchase option PoS Terminals for cash in and cash out transactions
Meanwhile, in another report revealed that commercial banks in Nigeria had introduced cardless ATM cash withdrawals. To collect cash from an ATM without using a card, customers must generate a code on their mobile phones or through their mobile banking app.
The latest innovation in banking technology preaches convenience and comes at a time Nigerians are battling with cash scarcity.
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