The Central Bank of Nigeria (CBN) has urged banks to review foreign currency denominated loans in line with the Prudential Guidelines for Deposit Money Banks in the country.
This is contained in a statement signed by the Director of Banking Supervision, Mrs Tokunbo Martins, and posted on the website of the apex bank.
The statement recalled that the CBN issued the Revised Guidelines for the Operations of the Nigerian interbank 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 foreign exchange market’’.
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 that 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.
Read More: ECONOMIC CONFIDENTIAL