The introduction of the Central Bank of Nigeria Guidelines for the Regulation of Agent and Banking Agent Relationships in Nigeria has been designed as a very effective method of disrupting the position in the banking and financial sector of Nigeria aimed at :-
– the provision of minimum standards and operational requirements for agency banking as a simple yet effective tool to extend the reach of banking services in Nigeria;
– strengthening financial inclusion in Nigeria;
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– the appropriate provision of agency banking services as a profitable banking platform.
Agency banking as a concept has successfully led to very high levels of financial inclusion and financial literacy as well as an overwhelming level of convenient banking services leveraging the nature of community life in Nigeria and fintech, giving rise to another type of value player in the financial industry – the super-agent, a rather new Fintech offering that will be the focus of this article which will examine:-
– The definition of Agency Banking as a concept and the categories of banking agents in Nigeria.
– The regulatory framework governing bank branches in Nigeria.
– Licensing requirements for super agents in Nigeria.
– Permitted and unauthorized activities for super agents in Nigeria.
– A basic idea of operational guidelines for super agents in Nigeria.
What is Agent Banking?
Agency banking involves the provision, primarily through fintech, of banking services to customers on behalf of a licensed deposit-taking financial institution or mobile money operator (known as a “principal”) by a third party known as the “agent”.
What is the Regulatory Frame governing Agency Banking in Nigeria?
Banking agents are regulated primarily by the Central Bank of Nigeria (CBN) through the Banks and Other Financial Institutions Act (BOFIA) and the Guidelines for the Regulation of Relations with Banking Agents and Banking Agents in Nigeria ( or “the guidelines”).
What are the categories of Banking Officers authorized below the Guidelines?
The categories of banking agents permitted under the guidelines are:-
- The Great Agent :- This is an agent under contract with an MMO or financial institution (primary) who can outsource other agents in a network over a wide geographical area and retaining overall responsibility for the operation of the relationship of agency.
- The Under– Agent :- A person to whom some or all aspects of the provision of agent banking services have been delegated by a super-agent.
- The Sole Agent :- An agent who does not delegate agency operating powers to other agents but assumes the agency by itself.
Who is in charge of Licence Great Officers?
The licensing of super agents falls under the purview of the Central Bank of Nigeria through the regulatory framework for the licensing of super agents in Nigeria, even though it is set up by an agency agreement with a financial institution or mobile money operator.
What are the terms for Great Agent Licence in Nigeria?
The requirements for a super agent license in Nigeria are:-
– Be a registered company with a minimum shareholder fund of N50 million unaffected by losses.
– Submitting an application as a registered company through your solicitor for a super agent license at the Central Bank of Nigeria through the Director, Banking and Payments Department.
– Proof that the business has been a business with an existing operational business for at least 12 months prior to the application.
– A certificate of incorporation of the applicant company with its memorandum and articles of association.
– A documented reference from a financial institution / mobile money operator.
– Proof of having at least 50 agents.
– A copy of the company’s board of directors’ resolution approving his super agent application.
– Company profile and functional contact emails, phone numbers, business and postal addresses.
– A documented structure of the company’s shareholding.
– A feasibility report.
– A company organization chart.
– The company’s IT policy.
– An enterprise risk management framework.
– A contingency and disaster recovery plan.
– A documented overview of the company’s shared agent network, including current and potential engagements, geographic distribution and benefits to be gained.
– Qualification criteria for hiring agents.
– Drafting SLAs (Service Level Agreements) with sub-agents and a banking agent contract with a financial institution/mobile money operator.
– An Anti-Money Laundering/Fighting Terrorism Financing/Know Your Customer (AML/CFT/KYC) Compliance Policy.
– Fraud detection plan.
– Risk management policy.
– Policy and consumer protection policy.
Box a Super Agent have agency contracts with After that 1 Financial Institution Where Mobile Silver Operator?
Yes, the Guidelines prohibit exclusive agent banking relationships, giving Super Agents the freedom to have Agency Agreements with multiple Financial Institutions and Mobile Money Operators.
What are some of the postoperative Compliance terms/ permit and not allowed Activities for Great Officers?
– Super agents can accept monetary deposits and withdrawals from customers.
– Utility bill payment services.
– Salary payment services.
– Local money transfer services.
– Balance Inquiry Services.
– Services for generating and issuing mini-statements.
– Collection and submission of account opening and other related documentation.
– Mobile Payments / Banking Agent.
– Cash disbursement and cash repayment of loans
– Collection of bank/correspondence mail for customers.
– Any other activity that the Central Bank of Nigeria may prescribe from time to time.
– Charge the customer a fee.
– Give all warranties.
– Execution of transactions for which a receipt or acknowledgment cannot be generated.
– Offering banking services on its own.
– Carry out a transaction when there is a communication failure with the financial institution (the principal).
– Pursue the activity of the agency when it has a proven criminal record involving fraud, dishonesty, integrity or any financial irregularity.
– Provide banking services not specifically mentioned in his bank agency contract.
– Carry out check deposits and check cashing.
– Provide cash advances.
– Be directed or managed by an employee or partner of a financial institution.
– Transactions in foreign currencies.
– Outsource another agent to operate on their behalf without being a licensed super agent.
Conclusion :- While the description above is certainly not exhaustive, it can be seen that Agency Banking is a potentially very lucrative Fintech offering that can be leveraged to provide positively disruptive financial inclusion services despite its rather strict regulatory framework . Anyone seeking to enter Agency Banking is therefore advised to consult their lawyer in the future.