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

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Ibrahim Ramalan
Ibrahim Ramalan
Ibrahim Ramalan is a graduate of Mass Communications from the Ahmadu Bello University (ABU) Zaria. With nearly a decade-long, active journalism practice, Mr Ramalan has been able to rise from a cub reporter to the exalted position of an editor; first as Arts Editor with the Blueprint Newspapers before resigning in 2019; second and presently as an Associate Editor of the Daily Nigerian online newspaper. He can be reached via ibroramalan@gmail.com, or www.facebook.com/ibrahim.ramalana, or @McRamalan on Twitter.
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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.

Mr 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.

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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.

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“Failing which such exposures shall be risk-weighted 150 per cent for Capital Adequacy Ratio computation in addition to other regulatory sanctions,” he said.

NAN

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