The Central Bank of Nigeria (CBN) has called on banks to review foreign currency denominated loans in line with its Prudential Guidelines for Deposit Money Banks in the country.
A statement issued by the Director of Banking Supervision at the CBN, Tokunbo Martins, and posted on CBN website Wednesday recalled that the CBN issued the Revised Guidelines for the Operations of the Nigerian inter-bank foreign exchange market on June 15 to enhance efficiency in the market.
“In continuation of its 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 Interbank forex market,” the CBN said.
“One of the effects of the guidelines which liberalised the foreign exchange market, is the increase in balances on foreign currency-denominated loans and advances in the books of banks.”
It said the exercise included facilities which had been fully provided for under the previous exchange rate regime, but were yet to be written off per extant regulation under Section 3.21(a) of the Prudential Guidelines.
The CBN consequently directed banks to ensure adequate and proper provisioning. It said this was required to ensure that the unprovisioned portion on all such facilities was fully provided for immediately in the income statements.
It added that evidence of the additional provisions be forwarded to the Director of Banking Supervision within a week of the issuance of the circular.
Source: NAM NEWS NETWORK