CBN Limits BDCs to $25,000 FX Weekly and One Dealer Bank

The Central Bank of Nigeria (CBN) has introduced new guidelines permitting Bureau de Change (BDC) operators to purchase up to $25,000 weekly from Authorised Dealer Banks (ADBs) in order to meet retail market demand.

In a circular released on February 5, signed by Dr. W. J. Kanya, the Acting Director of the Trade & Exchange Department at the CBN, the apex bank emphasized compliance measures to ensure transparency and minimize the risk of forex misuse.

According to the guidelines, BDCs are required to source their allocated forex from a single authorised dealer bank per week. This measure is designed to prevent speculative activity and facilitate improved oversight. BDCs found in violation of this rule will face sanctions from the CBN.

Additionally, authorised dealers are required to sell forex to BDCs at the prevailing rate in the Nigerian Foreign Exchange Market (NFEM) window to maintain pricing consistency.

The CBN has also set a 1% cap on the margin BDCs can charge end-users above their purchase price. This margin limit applies to all forex sold by BDCs, regardless of the source.

To further promote market transparency, the CBN has made it mandatory for both Authorised Dealer Banks and BDCs to adhere to specific reporting requirements.

“Authorised dealers must submit weekly reports of their forex sales to BDCs in a specified Excel format to the CBN Trade and Exchange Department via teddmo@cbn.gov.ng. BDCs must render daily returns on forex purchases and sales (utilisation) through the Financial Institutions Forex Reporting System (FIFX). These measures will help the CBN track forex flows and prevent illicit activities in the currency market,” the CBN explained.

The circular also outlines that BDCs are permitted to disburse purchased forex only for specific transactions, with a limit of $5,000 per transaction per quarter. These transactions include Business Travel Allowance (BTA), Personal Travel Allowance (PTA), overseas school fees, and overseas medical fees.

Additionally, the CBN has issued a stern warning that any Authorised Dealer Bank or BDC found violating these guidelines, including engaging in forex diversion, will face severe sanctions. These sanctions may include the suspension of their dealership license.