E-Financial
CBN Bars PSHCs from Accessing Bank Loans
Central Bank if Nigeria (CBN) has barred the proposed Payments Service Holding Companies (PSHC) from borrowing from the Nigerian banking system for the purpose of capitalising itself or any of its subsidiaries.
Mr. Godwin Emefiele, CBN governor
The CBN also prevented them from engaging in any transaction or maintain any business relationship with any of its subsidiaries, except such transaction or business relationship is at arm’s length.
The apex bank disclosed this in a circular to all deposits money banks, payment service providers and other financial institutions on issuance of the guidelines for licensing and regulation of PSHC in Nigeria.
The circular obtained from the bank’s website was signed by Mr. Musa Jimoh, director, Payment System Management Department, CBN.
The framework is sequel to a recent approval of new licence categorisations for participants in the Nigerian payments system.
The new payments system regulation earlier released by the bank had required companies desirous of operating more than one licence category, to set up a PSHC with the activities of subsidiaries clearly delineated.
The bank, however, mandated a PSHC to have a minimum paid-up capital which shall exceed the sum of the minimum regulatory capital/ total equity of all its subsidiaries, as may be prescribed from time to time by the CBN.
It stated that where the PSHC owns less than 100 per cent of the subsidiaries, its minimum paidup capital shall exceed the summation of its proportionate holding in the subsidiaries.
The framework stressed that excess capital in one subsidiary shall not be used to make up a shortfall in another subsidiary, adding that it is the capital of the PSHC that is rather applied to the subsidiaries.
The guidelines also stipulated that a PSHC ’s total exposure on contingent liabilities on behalf of its subsidiaries shall not exceed 20 per cent of the payments service holding company’s shareholders ’ funds unimpaired by losses.
The framework further prevented a PSHC from paying dividend on its shares except its operational, preliminary and organisational expenses, losses incurred and other capitalised expenses, not represented by tangible assets (excluding goodwill), have been completely written-off.
It pointed out that the arrangement would prevent commingling of activities, facilitate management of risks and enable the bank exercise adequate regulatory oversight on all the companies operating in the group.
The affected regulated payments activities include mobile money operations, switching and processing and payment solution services and any other activity as may be approved by the CBN.
The bank however, warned that an Approval in Principle for the is not an authority for the PSHC promoters to commence operations or perform any of the activities highlighted in the document adding that the CBN shall issue a PSHC license where it is satisfied with the promoters’ status of compliance with the conditions stated.
The document read among other things that, “Where a PSHC loses control of any of the two payments services subsidiaries – switching and processing company or mobile money operator in the group, for a period exceeding six consecutive months, the PSHC shall cease to be a PSHC and will be required to return its licence to the Central Bank of Nigeria for cancellation.
“Where a PSHC with only two subsidiaries , loses its controlling interest in either of the subsidiaries, for a period exceeding six consecutive months, the PSHC shall cease to be a PSHC and will be required to return its licence to the Central Bank of Nigeria for cancellation.”
FirstBank has formally denied allegations of fraud in an ongoing court case filed by customer Dr. Agbai Eke, describing the claims as “entirely unfounded and false.”
According to a statement from the bank, their internal investigation points to “unprofessional and unethical dealings” between Dr. Eke and a former bank employee.
FirstBank claims these individuals used a personal relationship to conduct unauthorised transactions without the bank’s knowledge or involvement.
The bank said it has reported the matter to law enforcement authorities for further investigation.
Officials noted that suspects have already provided statements to investigators.
FirstBank also declined to provide additional details, citing the ongoing court proceedings.
“We will refrain from further comments to allow the Court to dispassionately determine the issues before it,” the bank stated.
The case gained public attention following reports by Thisday Newspaper and Arise Television, as well as through a circulating video regarding the legal dispute.
Nigeria is undergoing a significant shift toward digital payment methods, with cash payments projected to decline by 32 percent by 2030, according to Worldpay’s Global Payment Report 2024 (GPR).
This is because access to financial services in remote areas via smartphones has transformed millions of people’s access to the global economy.
According to the report, Nigeria led Middle Eastern and African countries in cash dominance for point-of-sale transactions, accounting for 40 percent of 2024 PoS value from 91 percent in 2019.
The report said the use of cash in Nigeria is higher when compared to the MEA region including Saudi Arabia with 22 percent in 2024, South Africa (30 percent), and the UAE (17 percent).
“Over the past decade, Nigeria has witnessed progress in financial inclusion. According to the World Bank, the percentage of banked Nigerians increased from 30 percent in 2011 to 45 percent in 2021. Similarly, South Africa’s banked population grew from 54 percent in 2011 to 85 percent in 2021,” it said.
The Nigerian Inter-Bank Settlement System (NIBSS) reported that the number of active bank accounts surged to 311 million in 2024, further underscoring the country’s rapid financial transformation.
The global report disclosed that account-to-account (A2A) transfers via the NIBSS Instant Payments (NIP) have emerged as the leading e-commerce payment method in Nigeria.
Furthermore, A2A payments via NQR are now the second most popular payment method at the PoS, trailing only cash. This surge in A2A usage underscores the growing adoption of instant payment systems in the country.
Recent data shows that electronic payment transactions in Nigeria rose to an all-time high of N1.07 quadrillion in 2024. This is a 79.6 percent increase from the N600 trillion recorded in 2023.
Beyond transaction value, the volume of e-payments also saw a substantial increase. The total number of transactions processed by NIBSS rose from 9.7 billion in 2023 to 11.2 billion in 2024, representing a 15.5 percent year-on-year growth.
Also, PoS transactions soared to N19.4 trillion in 2024, marking an 81 percent increase from N10.73 trillion in 2023.
Industry experts attributed the surge in electronic transactions to a combination of factors, including the cash scarcity experienced in early 2023 and the continued implementation of the Central Bank of Nigeria’s (CBN) cashless policy.
The GPR report highlights MEA’s progress in digital payments, with e-commerce transactions accounting for 29 percent of total value in 2014. By 2024, digital payments represented 49 percent, nearly matching the combined value of cash and card transactions (51 percent). By 2030, digital payments are expected to dominate e-commerce, making up 65 percent of transaction value.
“The shift is even more pronounced at PoS. In 2014, digital payments accounted for only 1 percent of PoS transaction value. By 2024, they had grown to one-third of the market. Worldpay projects that by 2030, digital payments will account for 47 percent of PoS transaction value, nearly equalling traditional cash and card payments,” it said.
Nigerian Computer Society (NCS) has expressed concern over the Federal Government’s decision to replace Remita Payment Service Ltd with the Treasury Management and Revenue Assurance System.
Dr. Sirajo Aliyu, president, NCS, who spoke a press conference in Lagos, highlighted the potential impact of the decision on Nigeria’s indigenous Information Technology (IT) sector.
Remita, a subsidiary of SystemSpecs Software Technology Group, has provided payment solutions for individuals and organisations for nearly two decades, maintaining a 100 per cent Nigerian workforce. The government’s move, announced on 4 March, has raised concerns about its implications for local IT firms and the wider economy.
Dr Aliyu warned that replacing Remita could send the wrong message to local IT companies, discouraging investment in homegrown technological solutions.
He emphasised that the Treasury Single Account (TSA), powered by Remita, was a fully indigenous project that had been globally recognised for its success.
“We are concerned that this decision could undermine confidence in Nigeria’s IT industry.”
“While the government has the right to make changes, such decisions should involve extensive consultation with stakeholders to avoid unintended consequences,” Aliyu stated.
He added that the TSA had improved transparency, increased government savings, and enhanced operational efficiency in fund management. The sudden replacement of the platform, he cautioned, could disrupt these benefits.
Prof. Charles Onyeukwu, vice-president, NCS, also urged the government to reconsider its decision, noting that Remita had been selected through a rigorous process involving both local and international firms.
He suggested that instead of replacing the system, an Application Programming Interface (API) could be introduced to allow additional service providers to integrate with it.
“We believe a collaborative approach would ensure continuity while enhancing the system’s functionality,” Onyeukwu said.
A memo from the Office of the Accountant-General of the Federation confirmed that the Treasury Management and Revenue Assurance System would be implemented in two phases, starting on 4 March 2025.
The new system is designed to streamline revenue collection and payments across ministries, departments, and agencies.
The NCS, Nigeria’s premier body for computing and IT professionals, has called on the government to engage with Remita and other stakeholders to find a solution that supports both national development and the growth of the indigenous IT sector.
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