CBN Directs Banks to Provide for Foreign Currency Loans

The apex bank has issued a financial directive to commercial banks in Nigeria to foster business operations in the most populous nation in Africa. 

  
Godwin Emefiele

The Central Bank of Nigeria (CBN) yesterday issued a directive to all deposit money banks to ensure that the unprovisioned foreign currency-denominated loans are fully provided for immediately in the income statements and evidence of the additional provisions forwarded to the Director of Banking Supervision within one week according to the BusinessDay.

In a letter to all banks signed by Tokunbo Martins, director of banking supervision, the CBN said all foreign currency-denominated loans should be reviewed and adequate provisioning made on all delinquent ones in line with the Prudential Guidelines for Deposit Money Banks in Nigeria of July 1, 2010.

In continuation of the efforts to enhance efficiency, facilitate liquidity and transparency in the foreign exchange market, the CBN issued the Revised Guidelines for the Operations of the Nigerian Inter-bank Foreign Exchange Market on June 15, 2016.

Part of the letter reads, “One of the effects of the Guidelines, which liberalized the foreign exchange market, is the increase in balances on foreign currency-denominated loans and advances in the books of banks, especially facilities that had been fully provided for under the previous exchange rate regime, but were yet to be written off, per our extant regulation under Section 3.21(a) of the Prudential Guidelines for Deposit Money Banks in Nigeria of July 1, 2010”.

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