This is coming as financial institutions in the country seek ways to boost lending and avert a recession in Africa’s biggest economy.
The decision follows a request by banks for an amendment to the rule that requires lenders to retain bad debt in their books for 12 months before they are written off, after setting aside money for them, according to the central bank.
The apex bank said it had no intention of repealing the rule and granted a “one-off forbearance, this year,” according to a statement dated July 28 and posted on its website on Tuesday, August 9.
The Central Bank of Nigeria’s director for banking supervision, Tokunbo Martins, last month ordered lenders to fully cover foreign-currency denominated debt that increased as a result of the 38 per cent devaluation of the naira since a peg against the dollar was dropped in June.
The country’s economy may contract 1.8 per cent this year, according to the International Monetary Fund, as authorities struggle to cope with tumbling oil prices that have lowered government revenue.
The decision on forbearance was taken “in view of the current macro-economic challenges” facing the nation, the central bank said.
A NPL is one which interest is overdue and full collection of principal is uncertain. It is either in default or close to being in default.
