Banks to write-off Bad Loans this year

Nigeria's central bank this year is to allow banks to write off bad loans for which they have already made provisions to help them to clean up their balance sheets, Reuters reports.

Pressure has been building on the country's banks, whose loan books have been hit by Nigeria's shrinking economy, plunging currency and foreign exchange shortages following the slump in oil prices.

Africa's biggest oil exporter has been hammered by low crude oil prices, sales of which account for about 70 percent of national income.

Commercial banks asked the central bank to amend its rule requiring them to keep non-performing loans on their books for one year even after they have been fully provided for.

The Central Bank of Nigeria has granted them permission to write off these bad loans but this will be a one-off that will only apply until the end of this year.

"In view of the current macro-economic challenges ... the CBN hereby grants a one-off forbearance, this year 2016, to banks, to write-off fully provided NPLs without waiting for the mandatory one year," the bank said in a circular dated July 28 and published on its website on Tuesday.