Banks grumble as CBN imposes fresh CRR debits on 14 banks

Bankers have raised dust over the latest debits from bank accounts by the Central Bank of Nigeria in line with its Cash Reserve Ratio (CRR) compliance requirement.

National Daily gathered that on July 3rd, 2020, the CBN debited a whopping N118bn from 14 banks failing to meet up with its CRR threshold.

GTbank, Stanbic IBTC Bank led the affected banks with a N15bn debit apiece, while FBN, Union Bank and CitiBank were charged N12.4bn, N12.5bn, N1.2bn respectively.

Others are: Access Bank Plc: N3 billion; Ecobank Nigeria: N7 billion; Sterling Bank Plc: N5 billion; Fidelity Bank Plc: N11 billion; First City Monument Bank Ltd: N10 billion; Zenith Bank Plc: N7 billion; Wema Bank Plc: N3 billion; Titan Trust Bank: N2.5 billion; Rand Merchant Bank Nigeria Ltd: N4 billion.

Reacting to the latest debit, a top executive in a leading bank who craved for anonymity, said “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 cash reserve requirement is the minimum amount banks are expected to leave retained with the Central Bank of Nigeria from customer deposits. In January, the CRR was increased by 5% to 27.5% by the CBN Monetary Policy Committee (MPC) who explained that the decision was intended to address monetary-induced inflation whilst retaining the benefits from the CBN’s LDR policy.