The Central Bank of Nigeria (CBN) deducted N118 billion from Access Bank, GTBank, Zenith Bank and 11 other Nigerian banks. The debit was for Cash Reserve Ratio (CRR) compliance - the N118 billion is an amount deducted from customers deposits with banks which the lenders are expected to leave retained with the CBN.

The CBN has continued to withdraw the amount despite complains that it is affecting the availability of liquidity in the banking industry. It was learnt that liquidity is now below N100 billion according to Nairametrics. The CRR was hiked by 5% to 27.5% by the CBN Monetary Policy Committee (MPC) in January.

It was reported that the CBN made the debit in order to prevent banks from coming to the forex market with much cash, as large demand for forex could put pressure on the CBN. The huge deduction is leaving the banks cash-strapped - the latest N118 billion deduction was made on July 3, 2020.

The following are the banks:

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

A source who was quoted by Nairametrics had complained that, “These are huge amounts that are leaving the banking sector. It’s a squeeze on the banks. A bank like First Bank, for instance, has about N1.4 trillion in CRR with the Central Bank. And there is Zenith Bank with equally as much as N1.5 trillion. These are monies that banks can potentially put in loans at 52% at 30%, or even put in money market instruments at maybe 10%.

"So, for a shareholder of these banks, this CRR debits are impairing the banks’ ability to increase their earnings because now are not able to use the funds that are legitimately theirs to create money for their shareholders. And the question is that under what framework is the Central Bank choosing to take people’s money?”

They are only great at deducting our money, but not effective when it comes to using the money for the good of all in this country.

Just imagine.

They won't give loans that are readily accessible or help banks to push out such loans but would keep making all sorts of dodgy deductions, increase VATs on low and medium income earner and will never hike taxes on hanks declaring 100 billion turnover per annum


Nigeria is a miserable existence. Spits

Hopeless wicked FG using CBN with all those yeye grammer up there to justify their stealing.

I don't blame them but our useless banks especially GTB who went to donate to FG which has given them this idea. I noticed the deductions but no time to go complain.

This present administration is just cashing out on a cruise level.

What's now the difference between them and Hushpuppi.

Alennsar:
The Central Bank of Nigeria (CBN) deducted N118 billion from Access Bank, GTBank, Zenith Bank and 11 other Nigerian banks. The debit was for Cash Reserve Ratio (CRR) compliance - the N118 billion is an amount deducted from customers deposits with banks which the lenders are expected to leave retained with the CBN.

The CBN has continued to withdraw the amount despite complains that it is affecting the availability of liquidity in the banking industry. It was learnt that liquidity is now below N100 billion according to Nairametrics. The CRR was hiked by 5% to 27.5% by the CBN Monetary Policy Committee (MPC) in January.

It was reported that the CBN made the debit in order to prevent banks from coming to the forex market with much cash, as large demand for forex could put pressure on the CBN. The huge deduction is leaving the banks cash-strapped - the latest N118 billion deduction was made on July 3, 2020.

The following are the banks:

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

A source who was quoted by Nairametrics had complained that, “These are huge amounts that are leaving the banking sector. It’s a squeeze on the banks. A bank like First Bank, for instance, has about N1.4 trillion in CRR with the Central Bank. And there is Zenith Bank with equally as much as N1.5 trillion. These are monies that banks can potentially put in loans at 52% at 30%, or even put in money market instruments at maybe 10%.

"So, for a shareholder of these banks, this CRR debits are impairing the banks’ ability to increase their earnings because now are not able to use the funds that are legitimately theirs to create money for their shareholders. And the question is that under what framework is the Central Bank choosing to take people’s money?”

The CRR is not a means used by the CBN to take people's money. It is a form of monetary policy used to regulate the money supply in the economy and consequently to reduce inflation. All these banks know when they are not conforming with the CBN regulatory policy on CRR, so they cannot complain when it adjusts their balances. Besides, the money still belongs to the depositors (apart from the fiat portion). Please leave economics to the economists.