MON APRIL 08 2024-theGBJournal| The Central Bank of Nigeria (CBN) Monday banned bank customers from using foreign currency as collaterals for Naira loans, another comprehensive move aimed at protecting the banking system as the Naira strengthens.
The apex in a circular signed by its acting director, Adetona S. Adedeji, said that the current practice is ”prohibited” except where the foreign currency collateral is Eurobond issued by the Federal Government, or guarantees of foreign banks, including ‘Standby Letters of Credit.’
In this regard, the CBN urged that all loans currently secured with dollar-denominated collaterals should be wound down within 90 days, ”failing which such exposures shall be risk-weighted 150% for Capital Adequacy Ratio computation, in addition to regulatory sanctions.
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