Bank Directors have declared support for the CBN directive on the sale of excess dollars.
NewsOnline Nigeria reports that the Bank Directors Association of Nigeria says it is supportive of a directive by the Central Bank of Nigeria asking commercial banks to stop “hoarding’’ foreign currencies.
This Nigeria news platform recalls that the CBN had last week expressed concerns over the escalating foreign currency exposure of banks through their Net Open Positions.
Consequently, it issued a circular titled, ‘Harmonisation of Reporting Requirements on Foreign Currency Exposures of Banks,’ directing lenders to sell all excess dollar stocks to their customers.
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In the circular, the CBN stipulated that the NOP limit for overall foreign currency assets and liabilities should not exceed 20 per cent short or zero per cent long of shareholders’ funds.
Reacting on Monday, BDAN said it was fully aware of the CBN circulars which it said were aimed at 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 association said in a statement by its Chairman, Board of Directors, Mustafa Chike-Obi, on Monday.
Following the CBN directive, dollar supply rose by 180 per cent to $440m at the official foreign exchange market (NAFEM).
Reacting, BDAN said, “This directive, along with other prudential requirements outlined in the circular, plays a critical role in ensuring the effective management of foreign currency exposures”.
According to the central bank circular, the CBN aims to mitigate potential losses that could pose significant systemic challenges.
These regulatory measures, it was said, “underscore a strategic initiative aimed at bolstering 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 disclosed that it viewed the requirements as a positive step towards creating a resilient financial landscape and preventing adverse effects on the banking sector.
The statement further read in part, “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.
“Therefore, the association encourages all banks to fully comply with the new directives and actively participate in the implementation process to achieve full compliance.
“Furthermore, the association acknowledges the meticulous work undertaken by the Central Bank of Nigeria in consulting stakeholders and experts to ensure a balanced and effective regulatory approach.
“As advocates for responsible banking and ethical conduct, BDAN believes that these guidelines will contribute significantly to the long-term sustainability, growth, as well as the overall efficiency, transparency, and stability of the banking sector, ultimately contributing to the nation’s economic development.”
While pledging its support for the apex bank, BDAN said the steps being taken were in the right direction.
“BDAN pledges its continuous collaboration with the Central Bank of Nigeria and other stakeholders to foster a dynamic and resilient financial ecosystem that serves the interests of all Nigerians.
“We believe that these steps are in the right direction to improve the effectiveness of the Banking system and we are fully in support,” it submitted.
