Twenty six commercial and merchant banks that missed Cash Reserve Ratio (CRR) target set by the Central Bank of Nigeria (CBN) have been debited N459.7 billion by the regulator.
The new debit, in series of quarterly exercise started since June 2019, has pushed reluctant lenders to lend more to real sector and manufacturers.
The affected banks are United Bank for Africa Plc (N82.3 billion), First Bank of Nigeria Ltd (N59.3), Zenith Bank Plc (N50 billion), First City Monument Bank (FCMB) Limited (N45 billion), and Guaranty Trust Bank Plc (N40 billion). The rest of the affected banks can be seen in the table below.
Note that the latest CRR debits are coming barely one month after several banks were collectively debited to the tune of N1.4 trillion for the same reason in April.
During the CBN’s Monetary Policy Committee (MPC) meeting that was held last month, committee members voted to retain CRR rate at 27.5 per cent. The rate was increased in January this year from five per cent to its current level after the apex bank cited inflationary pressure concerns. What this means, therefore, is that Nigerian banks are required to keep 27.5 per cent of their deposits as CRR with the Central Bank of Nigeria.
Sadly, this move, in addition to similar policies by the CBN, has left many banks cash-strapped and unable to pursue various profitable ventures. While reacting to the latest development, a banker who refused to be identified, said:
The CRR is a portion of the banks’ deposits kept with the CBN for regulatory reasons.
The apex bank had directed banks to maintain a minimum Loan Deposit Ratio (LDR) of 65 per cent since the last quarter of last year.
