• Monday, July 22, 2024
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Banks to pay $10m to operate in Free Zones – CBN

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Deposit money bank or any enterprise that want to carry on banking business in Nigeria’s Free Zones (FZ) is required to pay a minimum paid-up capital of $10 million, according to the Central Bank of Nigeria (CBN).

The CBN in the “Guidelines for Banking Operations in the Free Zone in Nigeria”, released yesterday stated that only banks or financial holding companies licensed under Banks and Other Financial Institutions Act (BOFIA), or licensed foreign banks shall qualify to apply to the Nigerian Export Processing Zone Authority (NEPZA) for approval to establish presence to carry on banking business in Nigeria’s FZs.

The guidelines stated that an application to establish a bank in a FZ shall be submitted by the parent bank to the Authority along with the relevant fees, which shall be forwarded to the CBN by the Authority with complete documents which include an application letter; evidence of payment to the CBN of a non-refundable application
fee of $ 10,000 or such other amount as the CBN may prescribe from time to time and evidence of deposit of the prescribed minimum paid-up share capital with the CBN among others.

According to the guidelines CBN in reviewing the application and supporting documents may request for additional information, documents, and reports, as it may consider necessary. Where the application for a license is unsuccessful, the CBN shall release the capital deposit plus accrued interest within 30 days on receipt of a formal request by the promoters.

Where the CBN considers the application satisfactory, it shall grant a final license not later than three months from the receipt of complete information/documentation
upon the payment of a license fee of $20,000 or such amount as the CBN may prescribe.

It was stated in the guidelines that a bank in the FZs shall disclose to the CBN, the equity interests of its directors and key officers in any enterprise in the zones within fourteen days of acquisition of such interest.

“It shall be the duty of a director of a bank in a FZ who is in anyway, interested in the grant of an advance, loan or credit facility with the bank in the FZ to declare the nature of his interest to a meeting of the Board of Directors of the bank”, CBN said in the guidelines.

The CBN said a bank operating in Nigeria’s FZ shall enjoy incentives such as freedom to move funds in and out of the zone on all eligible transactions; and exemption from stamp duties on all its documents, exemption from withholding tax deductions on interest payable on deposits, dividends and royalties; exemption from corporate
and capital gains taxes; among others.