CBN reverses self, approves dollar loans to banks’ customers in 2017

In its bid to ensure that dollar currency is made available to vital sectors of the economy, the Central Bank of Nigeria (CBN) has concluded plans to reverse its earlier directive restraining commercial and deposit banks from giving dollar-based loans to their customers.

It has therefore asked the banks to put measures in place for customers, especially international business enterprises to open more domiciliary accounts.

The various banks are as from January 2017 to increase their customers’ loans on dollar dominations.

This is believed to be one the processes aimed at removing the assumed control of foreign currency control by government.

In a statement by the CBN Directorate of Banking Services sighted by Ripples Nigeria, the apex bank said the new policy is an improvement of 2016 directive restraining banks from offering indiscriminate dollar-based loans to customers.

The statement said, “In its sustained efforts aimed to addressing the issue of dollar scarcity in the country, it has become necessary to review some of the policy thrust as regards foreign exchange administration.

“This therefore calls for revisiting the supervisory and administrative programmes aimed at addressing major issues involving dollar-based loans to qualified applicants;
To that effect, one of the ways is to create more windows of opportunities for more domiciliary accounts to be operated by organizations, entrepreneurs and individuals.”

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It could be recalled that in July 2016, CBN banned banks from extending loans on foreign currencies to applicants, who do not attract foreign exchange to Nigeria.

It also limited the amount of dollar-based loan facilities to a maximum of $100 million to corporate bodies and $150, 000 to individuals.

CBN had noted that unabated dollar scarcity hitting the Nigerian economy was getting worse due to the rush for loans by banks’ customers. It then directed banks to introduce more practical means of monitoring their foreign currency positions as to enable them contribute positively to shoring up the continuous sliding of the value of the naira.

However, sources said the criticism that this policy attracted to government from the IMF and other international financial institution might have led to its reversal.

When contacted, CBN director, Banking Supervision, Mrs. Tokunbo Martins, said the dollar scarcity had been an issue that the apex bank would always be revisiting until normalcy returned in the system.

On when CBN will guaranty stability in the foreign exchange market, she said the scarcity and depreciation of naira was a result of the fall in the crude oil price at the international market, adding that the issue would be fully addressed before the end of first quarter of 2017.

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