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Regulator to reduce banks’ indebtedness to foreign lenders

By on October 25, 2015

Following the rising indebtedness of Nigerian banks to their correspondent banks abroad as a result of dollar scarcity in the economy, the Central Bank of Nigeria has begun moves to supply foreign exchange to companies with overseas obligations.

The PUNCH had on Thursday reported exclusively that the CBN’s ban on importers of certain items from accessing foreign exchange from the official forex market had made it difficult for a number of Nigerian companies to pay their overseas vendors.

The development has made banks in the country, which are the guarantors of those payments, to owe their correspondent banks abroad between $3bn and $4bn, The PUNCH reported quoting several top bank executives.

The CBN, in a circular on Friday, said it was now ready to sell forex to companies with foreign obligations that predated June 23, 2015, the date it banned importers of some 41 items from accessing forex from the official forex market.

The circular read in part, “Confirmed/unconfirmed letters of credit established before the release of the circular of June 23, 2015 in respect of the 41 items excluded from the forex market can now be paid from the interbank forex market. This circular applies only to the letters of credit established for the 41 items prior to the date of the circular.
[Punch]