Breaking News: CBN Bans Foreign Currency

Breaking News: CBN Bans Foreign Currency

The Central Bank of Nigeria (CBN) has issued a directive prohibiting the use of foreign currency-denominated collaterals for Naira loans across all Nigerian banks. This decision, outlined in a letter to commercial banks signed by the Director of the Banking Supervision Department, Adetona Adedeji, aims to address prevailing concerns and standardize banking practices…..READ ALSO CBN Sells $10,000 To BDCs At N1,101/$, Directs Operators To Maintain 1.5% Spread

Under the new guidelines, only specific exceptions are allowed, including Eurobonds issued by the Federal Government of Nigeria and guarantees from foreign banks, such as Standby Letters of Credit. Any loans currently secured with dollar-denominated collaterals, other than the approved exceptions, must be phased out within 90 days.

Failure to comply with this directive will result in the risk-weighting of such exposures at 150 per cent for Capital Adequacy Ratio computation, along with other regulatory sanctions. This move aligns with the CBN’s efforts to strengthen financial stability and uphold the integrity of the Naira amidst economic challenges.

The decision follows the recent announcement of minimum capital requirements for banks, indicating the CBN’s proactive approach to ensure a resilient banking sector. Governor Olayemi Cardoso has consistently introduced policies aimed at safeguarding the Naira and bolstering Nigeria’s economy in recent months.