By Munachimso Obienyi
The Central Bank of Nigeria (CBN) has started its move to mop up liquidity from the Nigerian economy by debiting a sum of N803.32 billion from 15 banks in the country as Cash Reserve Requirement (CRR) deductions.
The CRR is the amount the CBN debits from banks accounts in compliance with its monetary policy objective of mandatorily keeping cash on behalf of banks. The amount is not available for banks to use.
The apex bank had at its 287th Monetary Policy Committee meeting, raised the CRR to a minimum of 32.5 per cent from 27.5 per cent, while retaining the liquidity ratio at 30 per cent.
According to the CBN Governor, Godwin Emefiele, this is an approach to combat the rising rate of inflation in the country.
Emefiele had said, “We expect that all the banks in Nigeria must fund their account by Thursday because we will debit them for CRR. We will take their CRR at a minimum of 32.5 per cent and that means we are going to take liquidity out of their vaults by Thursday.
If any bank fails to meet up with these expectations, the decision of the MPC is that it may preclude those banks from foreign exchange market on Friday and onward until they meet the 32.5 per cent requirement”.
Thus, the banks that were debited include Zenith Bank, Access Holdings Plc, UBA, FCMB, Fidelity, FBN, Keystone, Titan, Polaris, Nova, Unity, Heritage, FBN Mortgage, and Suntrust Bank.
A further breakdown of the data showed that Zenith Bank parted with N270 billion, followed by Access Bank with a deduction of N205 billion. UBA also saw N133.7 billion being deducted, while N90 billion was debited from FCMB.
Others include First Bank (N33 billion), Union Bank (N28.7 billion), Keystone Bank (N13.8 billion), Titan Bank (N11.6 billion), Polaris Bank (N10 billion), Nova (N5.5 billion), Unity Bank (N1 billion), Heritage Bank (N470 million). FBN Microfinance Bank (N460 million), and Suntrust Bank (N92 million).
Critics of the CBN’s CRR debits suggest the money is used to fund the apex bank’s intervention programs in the economy as well as fund the government’s revenue shortfall via Ways and Means.
Banks, on the other hand, complain that the CRR debits have affected interest margins as they will rather have their vaults debited than increase their risk profiles
