The Association of Bureaux de Change Operators of Nigeria has thrown its weight behind the Central Bank of Nigeria’s decision to prohibit the use of domiciliary accounts as collateral for naira loans by banks. This move, as stated by ABCON President Aminu Gwadabe, is expected to enhance liquidity in the currency market and fortify the nation’s financial reserves.
In a circular titled ‘The use of foreign-currency-denominated collaterals for naira loans,’ the CBN instructed Nigerian banks to cease the practice of using foreign currency deposits as collateral for naira loans within a three-month timeframe.
Gwadabe expressed concern over companies leveraging their non-oil export domiciliary accounts for naira loans, emphasizing the need for a review of guidelines to limit currency holdings in such accounts and restrict access to foreign exchange requests at designated windows.
Furthermore, Gwadabe called for the conversion of CBN policies on BDC operations into legislation to instill confidence among investors. He highlighted the importance of engaging stakeholders to enhance market efficiency, transparency, and balance of payments in the retail market.
Acknowledging the CBN’s efforts in reinstating BDCs as a crucial market player, Gwadabe urged continued support to maintain stability and confidence in the market. The recent sale of $10,000 to eligible BDCs at a specified rate underscores the apex bank’s commitment to regulating the foreign exchange market.
In conclusion, Gwadabe emphasized the pivotal role of BDCs in achieving price stability and market liquidity, urging the CBN to sustain its efforts in maintaining market equilibrium and public trust.
