CBN Directs Banks To Provide For Foreign Currency Loans


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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. 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”.