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The Central Bank of Nigeria (CBN) has issued a fresh directive to commercial banks regarding their foreign exchange transactions.
In a letter dated September 11, 2023, the CBN instructed banks to refrain from using their foreign exchange revaluation gains for dividends and operational expenses.
These gains refer to the increase in the value of a bank’s assets and liabilities denominated in foreign currency due to changes in exchange rates.
The CBN emphasized that banks should use these gains to strengthen their capital reserves, enhancing their ability to withstand volatility and economic shocks.
The directive also addressed the Single Obligor Limit (SOL) and Net Open Position (NOP) limits, providing forbearance for banks that breach these limits due to the FX revaluation.
The CBN stated that existing prudential regulations on capital adequacy, dividend payments, and FCY borrowing limits would continue to apply.
This article was updated 3 months ago