
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.”