Nigeria: Central Bank Warns Banks To Shun Public Sector Funds, Forex

TheCentral Bank of Nigeriawarned banks to avoid the unstable public sector funds. The warning is aimed at avoiding the past consequences, which had dire consequences for the economy. Further, CBN also urged banks to stay off official allocation of foreign exchange, for survival and profitability. Instead, CBN advised banks to concentrate on deposit mobilization from the public. CBN's Operations' Deputy GovernorShamsudeen Usmansaid the banks should lend money for investment in viable economic development projects. Usman also identified factors that have led to the three major bank collapses in the country including short tenured and volatile deposit liabilities and widespread foreign exchange malpractices. The newspaperIndependentreported that over 68% of the total deposits in the banking sector at the start of the consolidation exercise had tenure of less than 30 days.