news - CBN Set to Introduce Agent Banking

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CBN Set to Introduce Agent Banking
May 30, 2012

29 May 2012 This Day Live - The Central Bank of Nigeria (CBN) has disclosed plans to encourage agent-banking in the economy, with the proposed introduction of the three-tiered Know-Your Customer (KYC) system.

The apex bank however stated that the main objective of the proposed system is to promote as well as deepen financial inclusion in the economy. The banking sector regulator stated this in a circular tagged: “exposure draft on the three-tiered KYC requirement programme,” posted on its website.

Agent banking refers to the delivery of financial services outside conventional bank branches. It entails the use of non-bank retail outlets that rely on technologies such as point-of-sale (POS) terminals, mobile phones, amongst others.

The CBN explained that it intends to use the proposed tiered KYC approach to implement flexible account opening requirements for low-level and low risk accounts that “are subject to caps and restrictions as the amount of transaction increases,” adding that it meant that account opening requirement would “increase progressively as restrictions on transactions are eased.”

It explained: “To facilitate the effective implementation of the proposed regime and achievement of the objective of financial inclusion, the three-tiered KYC approach envisages the use of bank agents and mobile banking portals to reach a wider segment of the society that otherwise have no access to financial services.

“This concept, therefore, calls for the introduction of agent-banking in Nigeria as obtainable in other jurisdictions that practise the tiered KYC,” it added.

According to the CBN, banks and other financial institutions under its purview would be made to comply with the system.

Commenting on the structure of the proposed system, it further explained: “The average monthly deposit cap in each amount would be set in multiples of N18,000 in the low-value and low-risk levels. This approach ensures that the account will remain attractive to customers of different socio-economic levels while keeping under close watch the risk involved.

“It is important to note that only maximum deposits and balances are specified for the low-value and low-risks categories of accounts. Also, financial institutions are required to have anti-money laundering/combating of financial terrorism solutions in place that will monitor the various thresholds,” it added.

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