The apex bank in Nigeria, Africa’s biggest crude oil exporter, Central Bank of Nigeria (CBN), has debited 14 banks in the country to the tune of N118billion in line with its Cash Reserve Ratio (CRR) compliance requirement.
These banks Pla6forms Africa gathered are:
Access Bank Plc: N3 billion
Guaranty Trust Bank Plc: N15 billion
First Bank of Nigeria Ltd: N12.4 billion
Ecobank Nigeria: N7 billion
Sterling Bank Plc: N5 billion
Fidelity Bank Plc: N11 billion
Union Bank of Nigeria Plc: N12.5 billion
First City Monument Bank Ltd: N10 billion
CitiBank Nigeria Ltd: N10.2 billion
Stanbic IBTC Bank: N15 billion
Zenith Bank Plc: N7 billion
Wema Bank Plc: N3 billion
Titan Trust Bank: N2.5 billion
Rand Merchant Bank Nigeria Ltd: N4 billion.
ABC of CRR
The cash reserve requirement (CRR) is the minimum amount banks are expected to leave retained with the Central Bank of Nigeria from customer deposits. In January, the CRR was increased by 5% to 27.5% by the CBN Monetary Policy Committee (MPC) who explained that the decision was intended to address monetary-induced inflation whilst retaining the benefits from the CBN’s LDR policy.
Details:
These constant CRR debits, which typically herald the apex bank’s FX auctions, a Lagos-based online newspaper, Nairametrics, reported, have served to significantly reduce liquidity in the system.
Quoting an insider who informed it about the latest debit, the newspaper said; “the liquidity within the system is now very tight”. As a matter of fact, liquidity is now reportedly below N100 billion.
Apparently, the CBN is using these weekly CRR debits to mop up liquidity in the system. In other words, these debits help to prevent banks from coming to the FX auctions with lots of cash.
Meanwhile, bank stakeholders have also collectively complained about these incessant CRR debits by the Central Bank of Nigeria. The negative impacts of CBN’s constant CRR debits were among some of the issues raised by banks’ stakeholders during Standard Chartered Bank’s 2020 Africa Investor’s Conference.
It is important to point out that many banks in the country, including the likes of First Bank, now have billions of their customers’ debits sterilised for the sake of CRR compliance.
