- Instructs institutions to assess whether additional acceptable collateral should be obtained within an appropriate timeframe.
- Financial institutions should follow prudent lending and financing practices when assessing collateral and associated credit risks.
In a circular, the CBK also directed financial institutions not to include such vouchers among the collateral calculated for meeting applicable regulatory requirements when preparing and submitting periodic reports for future periods.
The central bank stressed the need for financial institutions to conduct a comprehensive assessment of existing credit facilities secured by such guarantees, where applicable. Institutions must also assess whether additional acceptable collateral should be obtained within an appropriate timeframe.
The CBK said the measure is in line with its instructions on rationalizing and regulating credit and financing policies, emphasizing the importance of evaluating the nature of guarantees provided, their ability to mitigate credit risks, and their enforceability and liquidity when required.
The central bank reiterated that financial institutions should follow prudent lending and financing practices when assessing collateral and associated credit risks.
