Central Bank of Nigeria (CBN) has issued the regulatory guidelines for the operation of Indirect Participants in the Payments System, with effect from 11th November.
The guideline followed a circular to all Deposit Money Banks (DMBs) on Tuesday, signed by Mr Samuel Chukwuyem Okojere, Director of Payment Systems Management Department, CBN. The bank noted that this is in furtherance of its mandate for the development of the electronic payments system in Nigeria.
It described a direct participant as a bank that performs settlement functions to an indirect participant. Indirect participant means a licensed deposit-taking institution which is a non-clearing financial institution but settles its payments obligations through the direct participating bank.
The regulation according to the apex bank is in the exercise of the powers conferred on the Central Bank of Nigeria under the CBN Act 2007 to promote the sound financial system in Nigeria. It read in part, “The objectives of this Regulation shall be to: set out the procedures for effective integration of indirect participants in the payments system in Nigeria; standardise the operation of indirect participants in the payments system, taking into cognisance their operational risks; provide mechanism and framework for the clearing and settlement of indirect participants payment instruments through the direct participating banks,” among others.
According to the guideline, to qualify as an indirect participant, an institution shall: have a satisfactory risk-based rating from the CBN and secure a letter of recommendation from its direct participating bank, signed by the Chief Risk Officer and an Executive Director of the direct participating bank. Tribune
Pix: CBN headquarters, Abuja