CRR: Nigerian Banks debited N838 billion
About fifteen Nigerian banks have been debited a sum of N838.82b by the Central Bank of Nigeria (CBN) for not meeting the 32.5% CRR threshold.
The minimum sum that banks must hold in cash reserves with the CBN from client deposits is known as the cash reserve requirement (CRR). It is a measure initiated to reduce the amount of money moving around the economy. The CBN had announced that by Thursday, September 29, 2022, the bank will begin implementing aggressive cash reserve requirement measures by snatching up liquidity from commercial banks.
What’s its relevance?
The CBN observed that one of the primary causes of currency depreciation and rising inflation rates is the growing amount of money in circulation. To address this, the top bank increased the CRR from 27.5% to a minimum of 32.5% while keeping the liquidity ratio at 30%. At its 287th Monetary Policy Committee meeting, the CBN also increased the benchmark interest rate to a two-decade high of 15.5% while maintaining the asymmetrical corridor of +100/-700 basis points around the MPR. The CBN stated that it was battling the nation’s rising rate of inflation by employing a dual monetary strategy of interest rates and CRR. Some of the banks that were debited for the CRR include Access, Zenith, FCMB, Fidelity, FBN, UBA, Union, Keystone, Titan, Polaris, Nova, Unity, Heritage, FBN Mortgage, and Suntrust Bank.