CBN Issues Fresh Directive To Banks On Foreign Exchange Management

The Central Bank of Nigeria (CBN) has instructed banks not to utilize such foreign exchange revaluation gains to pay dividends or meet operating expenses.

The apex bank stressed the need for the banks to strictly comply with recent foreign exchange (FX) policy reforms aimed at restricting banks from using foreign exchange gains to pay dividend to shareholders.

The CBN, in a letter addressed to banks yesterday, and signed by the Acting Director, Banking Supervision, Adetona Adedeji, followed up on its earlier directive issued last year which emphasized the need for prudent financial management and risk mitigation.

It directed the banks to exercise utmost prudence and set aside foreign currency revaluation gains as a counter-cyclical buffer to cushion any adverse movements in the foreign exchange rate.

The letter stated: “Further to our letter dated September 11, 2023, referenced BSD/DIR/CON/LAB/16/020 on the above subject, the Central Bank of Nigeria wishes to reiterate that banks are required to exercise utmost prudence and set aside Foreign Currency (FCY) revaluation gains as a counter-cyclical buffer to cushion any adverse movements in the FX rate.

“In this regard, banks shall not utilize such FX revaluation gains to pay dividends or meet operating expenses.”