The Central Bank of Nigeria (CBN) has banned the use of foreign currency-denominated collaterals for naira loans, with exceptions to foreign currency collateral which are Eurobonds issued by the Federal Government or guarantees of foreign banks, including Standby Letters of Credit.
According to the new regulation directed to all banks by CBN’s Acting Director of Banking Supervision Department, Adetona Adedeji, banks can no longer accept deposits denominated in foreign currencies like USD, EUR, or GBP as security for loans issued in Naira. The ban extends to most foreign currency-based financial instruments, excluding those specifically permitted by the CBN.
The apex bank has also announced sales of $10,000 to each of the 1,588 BDC operators to meet retail market demand for eligible transactions.
A statement yesterday said it will sell at the rate of N1,101/$1, for them to sell to eligible customers at a spread of not more than 1.5 per cent above purchase price.
The listed eligible BDCs have been directed to commence payment of the naira deposits into four CBN accounts, starting from April 8, 2024, and asked operators to submit proof of payment and other documents at the appropriate CBN branches for disbursement.
