CBN: Disquiet After Apex Bank Hammers 13 Banks With N350bn CRR

By Tosin Olatokunbo

The Central Bank of Nigeria, CBN has wielded the big stick on some commercial banks in the country in its quest to enforce its Cash Reserve Requirement, CRR. As a pointer that the  Godwin Emefile-led apex bank will continue to breathe down on financial institutions to meet their obligations, a whopping N350 billion has been deducted from the accounts of some banks for the month of January.

According to Thisday, the CBN deducted N356.1 billion from 13 commercial banks last Friday, the very first time in the new year 2022.

This is in spite of feelings in the financial sector that the deduction is stifling banks’ capacity to expand credit to the productive sector.

This is even more so considering the fact that the current CBN 27.5 per cent CRR is above the threshold in other financial climes. Analysts in the sector disclosed that the CRR has risen to as much as 50 per cent in the past few years when it’s no more than seven per cent in order developing economies.

But CBN insiders told the magazine that the apex bank must control inflation by controlling excess cash in circulation, apart from checking bank’s appetite for roundtripping.

“Excessive cash in banks aids forex racketeering. Considering the current forex shortage facing the country, the CBN cannot afford to take a gamble,” a source said on Monday.

Emefiele had at the end of the monthly MPR meeting in January said its decision to directly deduct funds from banks failing in their CRR obligations has paid off in ensuring healthy monetary policy.

“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.,” Emefiele said after the MPC voted to retain existing monetary parameters at the end of its meeting last month.

The breakdown of the deductions indicates that Zenith Bank and Providus were debited N170 billion, N40 billion respectively. Others are: FCMB N39 billion, First Bank of Nigeria Limited N27 billion, Guaranty Trust Bank Plc N20 billion and Citibank N12 billion.

Others are Stanbic IBTC bank, Union Bank of Nigeria Plc and Polaris Banks which were debited N10 billion each, Keystone Bank N6 billion, Ecobank Nigeria N5 billion, Sterling Bank Plc, N3.6 billion, Fidelity Bank N2 billion and Nova merchant bank N1.5 billion.

Last December, the CBN debited 16 banks and two merchant banks N175 billion. The breakdown of the figure showed that, Zenith bank was debitted N90 billion, Access bank-N25 billion, Unity Bank Plc- N500 million, FCMB Limited- N5 billion. Others are Stanbic Bank- N4 billion, Polaris- N3billion and UBA- N25billion.