The Central Bank of Nigeria (CBN) has reiterated that banks are not allowed to use their foreign exchange revaluation gains for dividends or operational expenses.
A recent circular from the CBN signed by Adetona Adedeji, the Acting Director of the Banking Supervision Department, reaffirmed this directive.
It read: “Further to our letter dated September 1, 2023, referenced BSD/DIR/CON/LAB/16/020 on the above subject, the Central Bank of Nigeria wishes to reiterate that banks are required to exercise utmost prudence and set aside FCY revaluation gains as a counter-cyclical buffer to cushion any adverse movements in the FX rate.
“In this regard, banks shall not utilise such FX revaluation gains to pay dividends or meet operating expenses.”
This decision follows a previous instruction in September, where Deposit Money Banks were instructed to refrain from using gains from foreign exchange revaluation for dividends and operational costs.
The CBN’s directive, as outlined in a letter dated September 11, 2023, from the Director of the Banking Division Department at that time, Haruna Mustafa, is to be implemented immediately.