By Sunday Etuka, Abuja
The Central Bank of Nigeria (CBN) has prohibited the practice of using foreign currency-denominated collaterals for Naira loans.
CBN gave the directive to all the banks operating in the country, as seen in a letter signed by the Acting Director, Banking Supervision Department, Dr. Adetona Adedeji on Monday.
The apex bank, however, made an exception for FX Collaterals in Eurobonds issued by the Federal Government of Nigeria; or Guarantees of foreign banks, including Standby Letters of Credit.
Following the new directive, the CBN has instructed that all the loans currently secured with dollar-denominated collaterals other than the exceptions “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.
“Please be guided accordingly”, the apex bank said.
