The Central Bank of Nigeria (CBN) issued a directive on Monday instructing commercial banks not to utilize their foreign exchange revaluation gains for dividends and operational expenditures.
This directive, effective immediately, aims to safeguard against potential adverse fluctuations in FX rates. FX revaluation gains refer to the increase in the value of a bank’s assets and liabilities denominated in foreign currency due to changes in exchange rates.
The CBN emphasized that banks should use these gains to reinforce their capital reserves, enhancing the sector’s capacity to endure economic shocks. The directive also provides forbearance to banks that inadvertently breach the Single Obligor Limit (SOL) due to the FX policy, applying only to existing facilities as of the policy’s effective date.
