The Central Bank of Nigeria has written to all banks in Nigeria to stop the use of foreign currencies as collateral for naira loans.
It disclosed this in a circular titled “The use of foreign-currency-denominated collaterals for naira loans” with ref number: BSD/DIR/PUB/LAB/017/004.
The circular was signed by the apex bank’s acting Director, Banking Supervision Department, Adetona Adedeji, and uploaded to its website on Monday.
The apex bank said it had observed the use of FCY by bank customers as collateral for naira loans and, therefore, prohibits it with immediate effect.
It, therefore, directed banks to trim all existing loans with foreign currency collaterals to 90 days or attract a 150 per cent capital adequacy ratio computation as part of the bank’s risk.
