The Central Bank of Nigeria on Monday, May 8, authorized foreign banks in the country to work with their parent companies in availing and syndicating foreign currency-denominated loans (dollar loans) to Nigerian companies. The apex bank said the policy aligns with its mandate to promote financial system stability. In the Guidelines for the Regulation of Representative Offices of Foreign Banks in Nigeria, signed by CBN’s Director of Financial Policy and Regulation Department, Muhammad Musa, it was stated that a bank licensed under any foreign law, whose registered head office is outside Nigeria, or any financial institution licensed under foreign law, whose primary business includes the receipt of deposits, granting of loans and/or provision of current and savings accounts, are covered by the guidelines.This include foreign-owned operating bank/financial holding company that is foreign-based, that owns controlling interest in one or more banks or institutions whose primary business includes the receipt of deposits, granting of loans and provision of current and savings accounts. The guidelines are backed by Sections 6(1) and 8 (1) of the Banks and Other Financial Institutions Act 2020 (BOFIA) respectively which states that no foreign bank shall operate in Nigeria without prior approval of the CBN. The banks are also authorized to market the products and services of its foreign parent or an affiliate of the foreign parent licensed and domiciled outside Nigeria.They can also carry out research activities in Nigeria on behalf of the foreign parent and also serve as a liaison between the foreign parent and local banks, private institutions within Nigeria and other customers of the foreign parent based in Nigeria. They are also authorized to connect banks and other financial institutions to their parent firm, and assist exporters in Nigeria with information related to the laws and markets of target countries in which the foreign parent or any of the Groups affiliates has a subsidiary.Part of the responsibilities includes collating and distributing economic and financial information or country reports to its foreign parents for use by their customers and assisting their customers who desire to invest in Nigeria or do business with Nigerian companies subject to the extant Data Protection Regulations.They are also authorised to connect exporters with potential customers in jurisdictions where the parent company operates; and assist Nigerian exporters with finding new markets through its international offices.The CBN added;Representative offices are permitted to record revenue, in so far as such revenue does not relate to non-permissible activities as set out in section 3.2 below and emanates from intra-group services rendered to the parent company with such revenue taxed in accordance with transfer-pricing regulations. Revenue in this provision is limited to line items such as staff costs and business premises leasing fees.The banks are not allowed to provide services designated in Nigeria as banking business and provide any commercial or trading activity that may lead to the issuance of invoices for services rendered.In establishing a representative office in Nigeria, the CBN said a Memorandum of Understanding (MOU) between the CBN and the applicants home regulatory supervisor is essential. Where such an MOU is non-existent, the CBN will work with the home regulatory agency to establish/execute an MOU as soon as possible, it said.Not later than three months after obtaining the Approval-In-Principle, the promoters of a proposed office shall submit an application for the grant of a final license to the CBN, the apex bank said. The post CBN authorises foreign banks to give loans in dollar appeared first on Linda Ikeji Blog.