The Central Bank of Nigeria (CBN) has introduced new Cash Reserve Requirements (CRR) for deposit money banks (DMBs) in the country in furtherance of its current drive to eliminate all abuses in the banking system, including those associated with foreign exchange (FX) transactions in the markets.
With the latest requirements, the daily Cash Reserve Requirement (CRR) debits of the DMBs had been suspended but they are expected to meet the Loan/Deposit Ratio.
The apex bank, in a letter which was signed by the Acting Director, Banking Supervision Department, Mr. Adetona Adedeji, to the DMBs late Friday, stated that the action was intended to facilitate their capacity for planning, monitoring, and aligning their records with its records.
According to the letter, the determination of the lenders’ segment of deposits subject to sterilization with the CBN as CRR will now follow two processes.
The first phase is utilization of the Incremental Approach which requires that the extant ratios (commercial banks 32.5% and merchant banks 10%) will be applied to increases in the banks’ weekly average adjusted deposits.
In phase two, CRR levy of 50% of the lending shortfall will be enforced for banks that do not meet the minimum Loan to Deposit Ratio (LDR) as contained in a correspondence to all banks referenced BSD/DIR/GEN/LAB/12/049 dated September 30, 2019.
It stated that stated that the CBN will provide banks with details of the applied charges and their underlying computation rationale.
