The Central Bank of Nigeria (CBN) on Thursday issued regulatory guidelines for the operation of Indirect Participants in the Payments System, with effect from Nov. 11.
The apex bank made this known in a circular issued by CBN's Director, Payments System Management Department, Mr Sam Okojere, to banks.
The Indirect Participants are payments service providers who are non-clearing financial institutions but settle their payments obligations through clearing banks.
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.
The bank also directed that an indirect participant expected to settle all its payments obligations through only one direct participating bank per payment scheme at any given time.
"The relationship between a direct participating bank and an indirect participant shall be governed by a Settlement Agreement.
"Where the account of an indirect participant with a direct participating bank is not adequately funded, the direct participating bank may decline further settlement services to the indirect participant and inform the payment processor accordingly.
"Except as otherwise agreed, a direct participating bank or an indirect participant shall give at least thirty 30 days' notice to the other party before terminating the Settlement
Agreement for any other reason apart from the circumstances in 3.4.
"The terminating party shall notify the Payments Service Provider (PSP) of its intention to terminate.
"A direct participating bank and an indirect participating bank shall enter into a bilateral agreement to guide the relationship.
"Where an indirect participant connects directly to a PSP for transaction processing, the indirect participant, direct participating bank, and the PSP shall enter into a tripartite agreement", the bank directed.
It also directed that indirect participants must process their e-reference instruments through the direct participating bank or directly, through the Nigeria Inter-Bank Settlement System (NIBSS).
"In the latter option, NIBSS shall indicate the source, (bank, indirect participant)
of the e-reference requests.
"The receiving bank shall not discriminate between e-references originating from banks and indirect participants.
"An indirect participant shall comply with the applicable provisions of the Nigeria Bankers' Clearing System Rules (NBCS)".
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