Bank Directors Association of Nigeria Backs CBN Directive on Sale of Excess Dollars
The Bank Directors Association of Nigeria (BDAN) has thrown its weight behind a recent directive issued by the Central Bank of Nigeria (CBN), urging commercial banks to cease "hoarding" foreign currencies.
In response to concerns raised by the CBN regarding the mounting foreign currency exposure of banks through their Net Open Positions (NOP), the apex bank issued a circular titled 'Harmonisation of Reporting Requirements on Foreign Currency Exposures of Banks.' This directive instructed lenders to divest all surplus dollar stocks to their customers.
The circular specified that the NOP limit for overall foreign currency assets and liabilities should not surpass 20 per cent short or zero per cent long of shareholders' funds.
BDAN, in a statement released by its Chairman of the Board of Directors, Mustafa Chike-Obi, on Monday, expressed its full support for the CBN's measures, emphasizing their importance in fortifying the nation's financial system.
"The association wholeheartedly supports these comprehensive measures, which underscore the commitment of the CBN to ensuring the stability and resilience of the banking sector," the statement read.
Following the implementation of the CBN directive, dollar supply surged by 180 per cent to $440 million at the official foreign exchange market (NAFEM).
BDAN commended the directive, stating, "This directive, along with other prudential requirements outlined in the circular, plays a critical role in ensuring the effective management of foreign currency exposures."
The central bank's circular aimed to mitigate potential losses that could pose significant systemic challenges, with regulatory measures designed to enhance risk management, transparency, and accountability within the financial industry.
"The Bank Directors Association of Nigeria acknowledges and commends the Central Bank for its proactive stance in safeguarding the interests of depositors, investors, and the overall economic well-being of Nigeria," BDAN affirmed.
The association viewed the requirements as a positive step towards creating a resilient financial landscape and preventing adverse effects on the banking sector.
"The association applauds the CBN’s commitment to proactive regulation and remains supportive of initiatives that contribute to the stability and prosperity of the Nigerian economy," the statement concluded, urging all banks to fully comply with the directives to achieve comprehensive regulatory compliance.
