CBN Issues Fresh Directive To Banks On Foreign Exchange Management

CBN Issues Fresh Directive To Banks On Foreign Exchange Management

The Central Bank of Nigeria (CBN) has issued a fresh directive to banks, instructing them not to utilize foreign exchange revaluation gains for paying dividends or covering operating expenses……READ ALSO CBN Executes Historic Sale Of N1.3 Trillion Treasury Bills To Bolster Naira

This directive reinforces recent foreign exchange (FX) policy reforms aimed at restricting banks from using gains from foreign exchange for dividend payments to shareholders.

In a letter addressed to banks and signed by the Acting Director of Banking Supervision, Adetona Adedeji, the CBN reiterated its earlier directive from last year, emphasizing the importance of prudent financial management and risk mitigation.

Banks are instructed to exercise utmost prudence and set aside foreign currency revaluation gains as a counter-cyclical buffer to mitigate any adverse movements in the foreign exchange rate.

The letter stated: “Further to our letter dated September 11, 2023, referenced BSD/DIR/CON/LAB/16/020 on the above subject, the Central Bank of Nigeria wishes to reiterate that banks are required to exercise utmost prudence and set aside Foreign Currency (FCY) revaluation gains as a counter-cyclical buffer to cushion any adverse movements in the FX rate.

“In this regard, banks shall not utilize such FX revaluation gains to pay dividends or meet operating expenses.”

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