CBN Stops Use of Foreign Currency As Collateral For Naira Loans

The Central Bank of Nigeria (CBN) has decided to stop people from using foreign currency as collateral for naira loans.

CBN’s Acting Director of Banking Supervision Department, Adetona Adedeji gave the directive to all banks in a circular dated April 8, 2024.

The CBN wants people to stop the practice unless the foreign currency collateral is Eurobonds issued by the Federal Government or guarantees of foreign banks, including Standby Letters of Credit.

It also announced that it will be selling $10,000 to each of the Bureau De Change (BDC) operators at the rate of N1,101/$1 to help meet retail market demand for eligible transactions.

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The move is seen as part of CBN’s efforts to maintain the gain of the naira over the dollar.

Recall that the naira appreciated against the dollar in recent weeks, gaining over 40 per cent, from about N1,900/$ to about N1,200/$1 presently.

The Apex Bank also listed the names of 4,173 BDC operators that are barred from operations.