ABCON Backs CBN on Non-eligibility of Non-export Dom Accounts as Collateral for Naira Loans

The Association of Bureau De Change Operators of Nigeria (ABCON) has expressed its support for the Central Bank of Nigeria (CBN)’s recent directive to cease the use of non-oil export domiciliary accounts as collateral for Naira loans.

This was made known in a statement issued on Thursday in Abuja by its president Dr Aminu Gwadabe.

ABCON commended the CBN for this decision, recognising its potential impact on the financial sector. According to ABCON, the stoppage of using non-oil export domiciliary accounts as collateral will add to dollar liquidity in the market. It will also contribute to the accretion of the nation’s buffers.

Similarly, ABCON expressed surprise that some companies and manufacturers with substantial dollar balances in their non-oil export domiciliary accounts were sourcing foreign exchange needs in the official window and using the same funds for Naira loans.

ABCON recommended the that the apex bank engages in reviewing the guidelines on holding currencies in non-oil export accounts, suggesting a maximum holding period of 48 hours, similar to the policy in South.

In the same vein, the body recommends that the CBN should exclude applicants with large dollar holdings in non-export oil proceeds in Domiciliary accounts from being eligible for foreign exchange requests at both the NAFEM and NAFEX windows.

ABCON equally called for legislation regarding impending BDC reforms, ensuring comfort and guarantees for investors and also pledged support for the CBN’s proactive policies to address volatility.

According to the statement, “despite occasional perceptions, BDCs remain a potent transmission mechanism for achieving the CBN’s mandate of price stability and liquidity in the market.”