This was stated in a circular issued by Adetona S. Adedeji, Acting Director, Banking Supervision Department on Monday, adding that all loans secured with dollar-denominated collaterals should be taken down within 90 days.
The Central Bank of Nigeria has banned all commercial banks in the country from using foreign currency as Naira loans.
This was stated in a circular issued by Adetona S. Adedeji, Acting Director, Banking Supervision Department on Monday, adding that all loans secured with dollar-denominated collaterals should be taken down within 90 days.
The circular, titled “THE USE OF FOREIGN-CURRENCY-DENOMINATED COLLATERALS FOR NAIRA LOANS” reads: “The Central Bank of Nigeria has observed the prevailing situation where bank customers use Foreign Currency (FCY) as collaterals for Naira loans.
“Consequently, the current practice of using foreign currency-denominated collaterals for Naira loans is hereby prohibited, except, where the foreign currency collateral is:
“Eurobonds issued by the Federal Government of Nigeria; or Guarantees of foreign banks, including standby letters of credit.
“In this regard, all loans currently secured with dollar-denominated collaterals other than as mentioned above should be wound down within 90 days, failing which such exposures shall be risk-weighted 150% for Capital Adequacy Ratio computation, in addition to other regulatory sanctions."