Stop using forex as collateral for Naira loans, CBN warns bank customers

Stop using forex as collateral for naira loans, CBN warns bank customers

News Agency Of Nigeria

April 8, 2024 10:33 PM

The CBN says the current practice of using foreign currency-denominated collaterals for naira loans would only be allowed in the case of Eurobonds issued by the FG.

CBN Governor, Olayemi (Yemi) Cardoso

The Central Bank of Nigeria (CBN) has warned bank customers to desist from using foreign currency as collateral for naira loans.

Acting Director, Banking Supervision Department of the CBN, Adetona Adedeji, gave the warning in a statement on Monday, in Abuja.

Adedeji said that the current practice of using foreign currency-denominated collaterals for Naira loans would only be allowed in the case of Eurobonds issued by the Federal Government.

He said that guarantees of foreign banks, including standby letters of credit would also be allowed

“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 per cent for Capital Adequacy Ratio computation in addition to other regulatory sanctions,” he said.

News Agency Of Nigeria