As part of ongoing efforts to spur economic growth, the Central Bank of Nigeria, CBN has directed the release of excess cash reserve to banks in the country, through its issuance of 90-day Special window.
This is however in contrast to CBN’s disciplinary measures against commercial banks in the country who failed to meet the 27.5 CRR threshold in the last one year. No fewer than five banks have been hammered for failure to comply with the CRR, even when DMBs insist that their intermediation role has been greatly hampered by the instrument.
The CRR is the percentage of customers’ deposit expected to be domiciled with the apex bank.
Meanwhile, keen financial analysts insist that the intervention is the second in one week by the apex bank to push more liquidity into the economy, after it earlier retained the monetary policy rate, MPR or interest rate at 11.5 per cent during its Monetary Policy Committee meeting last week.
CBN’s desperate measures are necessary at this time to revive the economy which the federal government said has entered into recession, according to the apex bank’s monitors.
“The CBN on November 30, 2020, approved the release of the excess above regulatory minimum CRR of banks.
“This is part of measures to improve liquidity and support economic recovery through the increased extension of credit facilities to the real sector. This will be accomplished through the issuance of CBN Special Bills” the apex bank said in a letter to all the banks in the country on Tuesday.”
It warned banks to comply with the directive because “The CBN will continue to monitor banks’ utilisation of the liquidity injection from the CRR release to ensure optimal use for transactions that support economic recovery and growth.”
According to the apex regulator, the policy will be monitored for a 90-day tenure subject to renewal depending on the results within the first window.
The letter was signed by its Director, Banking Supervision, Mr. Bello Hassan.
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