CBN bans special Treatment for Payment Service banks

 CBN bans special Treatment for Payment Service banks

The Central Bank of Nigeria has prohibited parent companies or any other related entities of a Payment Service Banks from offering any preferential treatment, which negates fair competition, to its subsidiaries.

This was contained in a circular to PSBs on Thursday entitled ‘Guidelines for licensing and regulation of Payment Service Banks in Nigeria,’ which was signed by the Director, Financial Policy and Regulation Department, CBN, Kevin Amugo.

The CBN said it reviewed the PSB guidelines to update the earlier circular that was released on October 26, 2018, in response to market developments since its first issuance.

A parent company or any other related entity of a PSB, which renders services to its PSB, must extend similar services to other entities on the same terms and conditions, by ensuring that all intra-group transactions were at arms-length, the apex bank said.

Part of the circular read, “A parent company or any other related entity of a PSB is prohibited from offering any preferential treatment, which negates fair competition, to its subsidiary.

“Preferential treatment by a parent company or any other related entity shall, among others, include precluding its subsidiary’s competitor from using its infrastructure or services.

“Offering lower quality of service to its subsidiary’s competitors; offering such infrastructure or services at differential pricing; precluding any specific infrastructure or service as may be prescribed by the CBN from time to time.”

It added that the parent or related entities of a PSB must not engage in discriminatory or differential pricing in products or services offered to other PSBs or CBN-licensed institutions.

The CBN however retained the minimum capital of PSBs at N5bn.

LTV

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