CBN Introduces Supervisor­y Framework for Payment Service Banks

- Obinna Chima

The Central of Nigeria (CBN) has introduced the supervisor­y framework for payment service banks (PSBs) in the country.

In the supervisor­y framework posted on its website, the banking sector regulator explained that the introducti­on of the PSBs was to contribute to efforts to enhance access to financial services for the unbanked population of the Nigerian economy. The PSBs are expected to leverage on technology to provide services that would be easily accessed by the unbanked population and those who are in hard-to[1]reach areas of the country.

“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, risks 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 PSBs,” it added. According to the supervisor­y framework, the PSBs are also required to comply with relevant extant regulation­s and CBN’s prudential guidelines and circulars which are issued periodical­ly.

It stated that the PSBs shall use the words “Payment Service Bank” in their names to differenti­ate them from other banks.

However, the name of a PSB shall not include any word that links it to its parent company or promoter, it added.

Also, the PSBs are expected to operate mostly in the rural areas and unbanked locations targeting financiall­y excluded persons, with not less than 25 per cent financial service touch points in such rural areas as defined by the CBN from time to time; enter into direct partnershi­p with card scheme operators, among others.

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