CBN publishes framework for payment service banks

The Central Bank of Nigeria has recently released a comprehensive framework for Payment Service Banks (PSBs) aimed at streamlining their operations and promoting transparency. The apex bank has set out a series of regulations to guide the functioning of PSBs, with a particular emphasis on fostering financial inclusion, especially in rural areas. Technology entrepreneur Ade Atobatele joined CNBC Africa to discuss the implications of this new framework. Atobatele highlighted the significance of PSBs in reaching underserved populations, such as those in rural regions where traditional financial institutions may not be easily accessible. By leveraging technology and innovative solutions, PSBs can bridge the gap and provide essential financial services to these communities. One key aspect of the framework is the restriction on PSBs using terms that link them to their parent companies. This measure aims to ensure a level playing field and prevent anti-competitive practices. Additionally, PSBs are mandated to operate primarily in rural areas and focus on unbanked populations, aligning with the CBN's goal of enhancing financial inclusion. Atobatele pointed to successful models in other countries, such as India, where similar initiatives have proven effective in expanding financial services to underserved areas. While acknowledging that PSBs alone may not achieve the CBN's financial inclusion targets, Atobatele emphasized the importance of incremental progress and the need for a multi-faceted approach to address the issue. He praised the initiative for creating a platform for collaboration between telcos and PSBs, leveraging the widespread use of mobile phones in Nigeria. By establishing separate financial entities for telcos and PSBs, the framework aims to foster competition and drive deeper financial inclusion. Atobatele expressed optimism about the potential of this initiative to extend financial services to more Nigerians and expand access to crucial financial resources. While recognizing that challenges remain, he underscored the importance of continuous efforts to advance towards the ultimate goal of comprehensive financial inclusion.