Banks Unhappy As Lenders Lose N459.7bn To CBN For Failure To Meet CRR Target

About twenty-six banks have been debited N459.7 billion for failure to meet their CRR (Cash Reserve Ratio) obligations as demanded by the Central Bank of Nigeria (CBN). The deduction affected all major banks, ranging from Access Bank, GTBank, First Bank and many other major lenders.

What You Need To Know

It was learnt that Nigerian banks are required to keep 27.5% of their deposits as CRR with the CBN. Recall that members of the CBN Monetary Policy Committee (MPC) voted to retain CRR rate at 27.5% during last month MPC meeting. Note that, due to inflationary pressure, the rate was hiked from 5% in January.

The new deduction comes a month after CBN debuted N1.4 trillion from several banks for failing to meet the CRR obligation in April. The CBN has now been making some CRR debits on a weekly basis from lenders that are unable to meet the requirement.

According to a Nairametrics report, the most affected banks are United Bank for Africa Plc (N82.3 billion), First Bank of Nigeria Ltd (N59.3), Zenith Bank Plc (N50 billion), First City Monument Bank (FCMB) Limited (N45 billion), and Guaranty Trust Bank Plc (N40 billion).

Banks Are Frustrated By CBN's Deductions

According to a source quoted by Nairametrics, CBN indiscriminately debits banks, “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.

“You know the central bank also does what we call retail FX intervention, that is when they sell FX to corporates. Now, because they don’t want banks coming with huge demands, what they do is that a day before the FX sales, they debit the banks so that the naira you have available is small and you cannot put them under pressure because of your FX demands. That has really been the driver.

“You know the central bank also does what we call retail FX intervention, that is when they sell FX to corporates. Now, because they don’t want banks coming with huge demands, what they do is that a day before the FX sales, they debit the banks so that the naira you have available is small and you cannot put them under pressure because of your FX demands. That has really been the driver.

“We understand that the central bank had set up a special CRR team that is supposed to monitor banks’ CRR once a month. But now, the team monitors banks’ CRR on a weekly basis. This is why the central bank is effectively debiting banks on a weekly basis. Some weeks ago, they debited some banks about N1.4 trillion.

"That was one of many. 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."

Banks Affected By The Deduction

Meanwhile, as seen in the table below, the CRR debits affected not just major lenders, but other low tier banks across Nigeria.