CBN sanctions UBA, others over failure to meet CRR target

The Central Bank of Nigeria (CBN) has sanctioned about twenty six banks in the country with a cumulative fine of N459.7 billion over their failure to meet their Cash Reserve Ratio obligations to the apex bank.

According to the information hosted on the site of the CBN, some of the banks included UBA which was fined N82.3 billion, First Bank of Nigeria- N59.3 billion, First City Monument Bank (FCMB) Limited (N45 billion), and Guaranty Trust Bank Plc (N40 billion).

Others are Access Bank- N13.6bn; Citibank- N24.4bn; Stanbic IBTC- N37bn; FBN Merchant Bank- N250 million; Keystone Bank- N10 billion; Wema Bank- N4 billion and Sterling Bank- N14 billion and several others.

It would be recalled that the CBN’s Monetary Policy Committee (MPC) meeting that was held last month, committee members voted to retain CRR rate at 27.5%. The rate was increased in January this year from 5% to 27.5% after the apex bank cited inflationary pressure concerns.

What this means, therefore, is that Nigerian banks are required to keep 27.5% of their deposits as CRR with the Central Bank of Nigeria. Sadly, this move, in addition to similar policies by the CBN, has left many banks cash-strapped and unable to pursue various profitable ventures.

While reacting to the latest development, a banker who refused to be identified, said: “What we’ve seen in recent times is that the CBN just indiscriminately debits banks, usually towards the stale-end of every week. They will look at your bank account and if your liquidity is plenty, they will debit you.

“Between that time and now, there have been more debits that have happened. But the debits that are huge/significant are what is troubling the banks. There was a N300 billion that happened about two weeks ago, and then yesterday that was this N459.7 billion that was also debited.

“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,” he added.