The Association of Bureaux de Change Operators of Nigeria has expressed support for the Central Bank of Nigeria’s directive to banks to stop the use of domiciliary accounts as collateral for naira loans.
President of ABCON, Aminu Gwadabe, revealed the association’s stance in a statement on Thursday, pointing out that the directive would not only boost liquidity in the currency market but also strengthen the nation’s buffers.
The apex bank prohibited the practice and gave the banks three months to end all such transactions.
Speaking on how the practice of companies using their non-oil export domiciliary accounts as collateral for naira loans, Gwadebe said, “We are bewildered that some companies and manufacturers with huge billions of dollars balances in their non-oil export Dom account source their FX needs in the official window and use same for naira loans.
“We therefore advise for the review of the guidelines on holding currencies on non-oil export accounts to a maximum of 48 hours, to borrow from the South African policy on the operations of non-oil exports dom account proceeds. The CBN should also not make applicants of huge billions of dollars holding in their non-export oil proceeds dom accounts eligible for FX request at both the NAFEM and NAFEX windows.”
Gwadebe also called for an upgrade of CBN policies on BDC operations to legislation so as to boost investor confidence.
The apex bank warned that the BDCs must not sell at a spread of more than 1.5 per cent above the purchase price.
