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.
Section 8.3 of the 31-page document is devoted to outlining prohibited activities for agents.
A closer look at some of the prohibited activities
According to Vanguard, 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 to avoid transactions that do not generate a receipt or acknowledgement.
In addition to the restrictions mentioned above, the circular forbids agents from conducting foreign currency transactions.
Agent banking is a financial inclusion service that aims to bring retail banking services to all segments of the population, particularly rural residents.
First Monie, EcoBank Express, UBA Moni, Zenith Mobile Money, and others are among the service providers.
According to the CBN, the agent banking initiative has resulted in the proliferation of financial service agents across Nigeria.
As a result, an increasing proportion of financial transactions are now conducted through agents.
Complete list of activities prohibited for agent banking
- Operate or carry out any transaction when there is a communication failure with the Financial institution (FI).
- Carry out a transaction where a receipt or acknowledgement cannot be generated.
- Charge customers’ fees outside the regulated fees regime.
- Give any guarantee.
- Offer banking services on its own accord.
- Continue with the agency business when it has a proven criminal record involving fraud, dishonesty, or any other financial impropriety.
- Provide, render, or hold itself out to be providing or rendering any banking service which is not specifically permitted in the contract.
- 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.
- Undertake cheque deposit and encashment of cheques.
- Transact in foreign currency.
- Provide cash advances.
- Be run or managed by FI’s employee.
- Sub-contract another entity to carry out agent banking on its behalf except where there is a super-agent structure in place.
- FI may in the contract document specify other activities, which the agent is prohibited from undertaking.
- Accept deposit or allow withdrawal above an amount which shall be prescribed from time to time, by the Bank.
- Use the wrong option for transactions e.g., Agents shall not use purchase option PoS Terminals for cash in and cash out transactions