• CBN has granted conditional approval to Hope PSB, Money Master PSB, and 9PSB
  • The Apex bank says the same code of corporate governance guiding banks would also apply to the PSBs.
  • PSBs licence is part of CBN’s efforts to reduce the unbanked population by 20% next year.

To enhance financial inclusion and reduce the unbanked population, the Central Bank of Nigeria (CBN) has granted Approval-In-Principle (AIP) to three Payment Service Banks (PSBs) in the country.

The three institutions are Hope PSB, Money Master PSB, and 9PSB.

The CBN said the effort was part of the effort to develop the payment system by increasing access to deposit products and payments services through a secured technology-driven environment.

Isaac Okorafor, Director of Corporate Communications Department, CBN, explained that the AIP followed the institutions’ satisfactory documentation and other laid down conditions.

He disclosed that the CBN’s code of corporate governance for banks would also be applicable to the PSBs.

The Director, Corporate Communications Department, CBN, Isaac Okorafor
The Director, Corporate Communications Department, CBN, Isaac Okorafor

What does this mean

Approval in Principle (AIP) is an indication that an institution had followed the initial application processes and awaiting full-fledged authorisation. “They are expected to submit their respective applications for the grant of a final licence, not later than six months after the AIP,” Okorafor said.

CBN plans to deepen financial inclusion

In June 2019, CBN released a five-year plan to deepen the role of financial technology firms (fintechs) in Nigeria's banking system and increase financial inclusion.

Peter Mushangwe, a banking analyst at Moody’s, says, “Nigeria’s plan to deepen the role of Fintech firms in Nigeria's banking system will result in increased competition for incumbent banks, a credit negative.

"However, we expect Nigeria's large banks – Access, Zenith Bank, First Bank of Nigeria, United Bank for Africa Plc and Guaranty Trust Bank Plc to be better positioned to defend their market shares due to larger customer bases and large technology budgets.”