. Zenith Bank alone debited N90bn
.Banks now has effective CRR ratios of 35-45%
Kayode Tokede
The latest debit by Central Bank of Nigeria (CBN) on 16 commercial banks, and two merchant banks amounted to total of N178.3 billion over failure to meet 27.5 per cent CRR (Cash Reserve Ratio) threshold, THISDAY can report.
A top director in a Tier-II bank exclusively disclosed to THISDAY that the apex bank every week debited banks and merchant banks for not meeting the 27.5 per cent CRR threshold.
CRR is the minimum amount banks and merchant banks are expected to retain with the CBN from customer deposits.
In early 2020, the apex bank’s Monetary Policy Committee (MPC) increased CRR by five per cent from 22.5 per cent to 27.5 per cent over its intention to address monetary-induced inflation whilst retaining the benefits of its 65 per cent Loan Deposit Ratio (LDR) policy.
The monetary policy that was introduced by CBN in 2019 has drawn mixed reactions from stakeholders who have cited a drop in banks profit, among others.
According to the Tier-2 bank director who pleaded anonymity said: “The CBN continues to suck up liquidity from the system with consistent CRR debits. The debits now come more during Foreign Exchange (FX) bids days and is no longer tied to the 27.5 per cent rules that previously governing CRR debits.
“The average commercial bank now has effective CRR ratios of 35-45 per cent. The resultant opportunity cost is huge on the industry. The CBN can continue to ration FX supplies without the attendant liquidity squeeze. But this has become the industry norm.”
The CBN Governor, Mr. Godwin Emefiele had at the end of January 2020, MPC noted that: “the committee is confident that increasing the CRR at this time is fortuitous as it will help address monetary-induced inflation whilst retaining the benefits from the Bank’s LDR policy, which has been successful in significantly increasing credit to the private sector as well as pushing market interest rates downwards.
“The Committee further encouraged the Management of the banks to be more vigorous in its drive to improve access to credit through its pursuit of the Loan-to-deposit ratio policy as doing this would help, not only in creating job opportunities but also help in boosting output growth and in moderating prices.”
According to data obtained by THISDAY, Zenith Bank Plc was the most debited bank on November 17, 2021, followed by Access […]
