The Central Bank of Nigeria (CBN) has issued a directive to all banks operating in the country, instructing them to discontinue the practice of accepting foreign currencies as collateral for naira loans.
This significant decision was communicated through a circular uploaded on the CBN’s official website on Monday.
The CBN highlighted its concerns over the increasing utilization of foreign currencies by bank customers as collateral for naira loans. As a result, the apex bank has taken swift action to prohibit this practice, effective immediately.
The circular did not provide detailed explanations behind the decision, but it signals a significant shift in the CBN’s stance on loan collateral. Further information regarding this policy change is expected to be released in due course.