Analysts predict an upsurge in dollar availability following a new policy issued by the Central Bank of Nigeria (CBN). The directive, aimed at lenders, is anticipated to strengthen the naira’s position.
On Monday, the CBN prohibited the use of foreign currency-backed collaterals for obtaining naira loans. Banks that do not phase out existing dollar-secured loans within 90 days will face penalties.
Exceptions to this rule include Eurobonds by the Nigerian government and foreign bank guarantees, such as standby letters of credit.
Adetona Adedeji, the acting director of the banking supervision department, highlighted the prevalent trend of using foreign currencies as loan security in a notice to all banks.
Non-compliance will lead to a 150 percent risk weighting of such loans when calculating the capital adequacy ratio, along with other penalties.
