Deposit Money Banks (DMBs) have collectively suffered a debit of N226 billion in compliance with the Cash Reserve Requirements (CRR) fixed by the Central Bank of Nigeria (CBN).
According to a reliable source, the debit occurred in the week ended November 20, 2020.
This follows a whopping N917.5 billion debit recorded a month ago as reported by Nairametrics. The central bank imposed CRR sequesters on banks that fail to meet its minimum lending targets as a percentage of deposits.
In its September monetary policy communique, the bank claimed its policy measures have led to increased lending in the economy emphasizing the need to double down on it.
“The Differentiated Cash Reserves Requirement (DCRR) and the minimum Loan-to-Deposit Ratio (LDR), have ensured a significant stream of credit to the real economy.
As at end-August 2020, aggregate bank credit had risen by about N3.7 trillion relative to its level in May 2019, when the LDR policy was introduced.
The outlook for credit to the economy remains positive given that these policies are still in place and, importantly, that the banking industry continues to be resilient.”
Out of the N226 billion debited for November 2020; top five (5) banks in Nigeria – FUGAZ, bore the biggest brunt, with a combined debit of N137.5 billion, implying that the top 5 banks accounted for 60.8% of the total debit for this month.
The break down of the debit for the top five banks are; GT Bank (N59.5 billion), Zenith Bank (N30 billion), FBN (N20 billion), Access (N18 billion), and UBA (N10 billion).
Nairametrics had earlier reported that CBN increased the CRR in January by 5% to 27.5% to address monetary-induced inflation, whilst retaining the benefits from the CBN’s LDR policy.
Cash Reserve Ratio (CRR) is a specified minimum fraction of the total deposits of customers, which commercial banks have to hold as reserves either in cash or as deposits with the central bank. CRR is set according to the guidelines of the central bank of a country.