Banks In Trouble As MTN, Airtel Get CBN’s Approval To Start Banking Business

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Two leading telecommunications giants, MTN Nigeria and Airtel have finally been given approval-in-principle by the Central Bank of Nigeria (CBN) to commence banking business in Nigeria. However, the approval is likely to come with dire consequences for financial institutions in the country, The New Diplomat has learnt.

Checks by The New Diplomat revealed that the approval had stalled for about three years since 2018 when the Nigerian government first announced plans to issue Payment Service Banks (PSB) licenses to non-financial companies in the country. Before the landmark announcement Friday, many had allegedly fingered Deposit Money Banks (DMBs) in the delay by the CBN in granting the approval.

It is expected that the granting of banking lincences to the telcos will set off a new competition between telcos including other PSB operators and banks, who had already seen enough competition from fintech companies that have continued to disrupt operations in the nation’s financial sector.

CBN made the announcement on Friday in separate letters addressed to the management of the Nigeria Exchange and the telecom companies. The letter noted that their subsidiaries have been granted approval in principle to operate Payment Service Banks (PSB) in Nigeria.

Airtel which has a 27 percent share of the telco market said in its letter that “Airtel Africa, a leading provider of telecommunications and mobile money services, with a presence in 14 countries across, today announces that its subsidiary SMARTCASH Payment Service Bank Limited (“Smartcash”) has been granted approval in principle to operate a payment service bank business in Nigeria.

“Final approval is subject to the Group satisfying certain standard conditions within six months”.

Also, Telecommunications giant, MTN explained that the grant of approval in principle is the first step in the process towards final approval, subject to the fulfillment of certain conditions as stipulated by the CBN.

“MTN Nigeria communications PLc as promoter received an approval in principle dated 4 November 2021 from the CBN for a licence application for the proposed MoMo Payment Service Bank Limited”.

“The decision to issue a final approval is firmly within the regulatory purview of the CBN and we respect their right and judgment in that regard,” it said.

However, CEO, Airtel Africa, Segun Ogunsanya affirmed that Smartcash has been granted an approval-in-principle to operate a service bank business in Nigeria.

“I am very pleased that Smartcash has been granted an approval-in-principle to operate a service bank business in Nigeria.

“We will now work closely with the Central Bank to meet all its conditions to receive the operating licence and commence operations”.

“The final operating licence will enable Airtel to expand its digital financial products and reach the millions of Nigerians that do not have access to traditional financial services.

“I am looking forward to working closely with the Government, the Central Bank and traditional financial institutions to expand financial inclusion and meet the evolving needs of our customers and the economy,” Ogunsanya said.

Meanwhile, MTN Nigeria asserted commitment towards the financial inclusion agenda of the CBN and the Federal Republic of Nigeria, promising to continue to explore means whereby it can contribute to its fulfillment.

“While we look forward to the eventual grant of a final PSB licence, we will continue to communicate material information in accordance with regulatory obligations and guidelines,” MTN said.

The New Diplomat reports one of the conditions set by the CBN for Payment Service Banks in Nigeria is that they must meet a minimum capital requirement of $12.2 million (N5 billion), something that’s within the easy reach of Airtel and MTN Nigeria.

Gbenga Ojo
Gbenga Ojohttps://newdiplomatng.com/
At The New Diplomat, we stand for ethical journalism, press freedom, accountable Republic, and gender equity. That is why at The New Diplomat, we are committed to speaking truth to power, fostering a robust community of responsible journalism, and using high-quality polls, data, and surveys to engage the public with compelling narratives about political, business, socio-economic, environmental, and situational dynamics in Nigeria, Africa, and globally.

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