Foreign currency has been prohibited for use as collaterals for naira loans with exceptions to Eurobonds including Standby Letters of Credit.
According to reports, the ban was issued by the Central Bank of Nigeria (CBN) and they have given banks 3 months to wind up naira loans that have been backed up by foreign currency (FCY) denominated collaterals, saying its use is now prohibited.
In a letter to all banks issued by the acting Director Banking Supervision department of the CBN, Dr Adetona Adedeji, the apex bank said “the current practice of using foreign currency-denominated collaterals for Naira loans is hereby prohibited.
The apex bank furthered that the use can be permitted in situations where the foreign currency collateral is either Eurobonds issued by the Federal Government of Nigeria or guarantees of foreign banks, including Standby Letters of