The Central Bank of Nigeria, CBN, yesterday issued regulations for the operations of indirect participants in payments system in a bid to develop digital financial services in the country.
The apex bank, in a circular to Deposit Money Banks (DMBS), Mobile Money Operators (MMOs) and Other Financial Institutions (OFIs) said that the aim of the regulation, among other things, was to set out the procedures for effective integration of indirect participants in the payment system in Nigeria.
Indirect Participant means a licensed deposit-taking institution which is a nonclearing financial institution but settle its payments obligations through direct participating bank.
The circular signed by Director Payment System Management Department, CBN, Sam Okojere, stated: “The CBN in furtherance of its mandate for the development of electronic payments in Nigeria, hereby issues the regulations for the operations of indirect participants in the payment system with effect from 11th November 2019.
“The objectives of this regulation shall be to set out the procedures for effective integration of indirect participants in the payments system in Nigeria; standardise the operation of indirect participants in the payments system, taking into cognisance their operational risks; provide mechanism and framework for the clearing and settlement of indirect participants payment instruments through the direct participating banks; and strengthen indirect participants for effective contribution to digital financial services in Nigeria.
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“Minimum criteria to qualify as an indirect participant, an institution shall have a satisfactory risk-based rating from CBN and secure a letter of recommendation from its direct participating bank, signed by the Chief Risk Officer and an Executive Director of the direct participating bank; and comply with the Nigeria Uniform Bank Account Number (NUBAN) standards components of the Payments System.
“Indirect participants may take part in any of the following payments operations: Cheque Clearing; Electronic Fund Transfer, EFT, and Bulk Payments; Instant Payments; Card Issuance; Card Transaction Acquiring (Automated Teller Machine, Point of Sale, Web, etc.); Portals (e-Reference, Anti-Fraud, e-Signatory, e-Passport, etc.); Bank Verification Number System; and any other component approved by the CBN.”