The Central Bank of Nigeria has debited 28 commercial and merchant banks in the country for failing to meet the required Cash Reserve Requirement.
The CRR is the minimum requirement banks are expected to retain with the CBN from customers’ deposits.
The apex bank had, after the Monetary Policy Committee meeting in January, increased the CRR to 27.5 per cent from 22.5 per cent, indicating a five per cent increase.
The CBN’s action has resulted in the soaring rates of 35 per cent from just two per cent in the money market during the previous session.
Reason for the raise in CRR, according to the CBN, was informed by recent inflationary pressure in the economy, while stating that the decision to hold other rates was that the MPC members were convinced on the need to watch the response of the economy to several policies the apex bank has introduced.
Topping the list is Zenith Bank with a debit of N355.95bn, followed by First Bank with N206.1bn. United Bank for Africa came third on the list with N204.7bn.
But the banks have complained that the move would affect their ability to earn an income in the customer deposits. They have also reduced their drive for bank deposits to avoid further CRR punishments.
More so, most tier two banks have responded by cutting their dividend payment to shareholders. Slashing dividend will enable banks keep some of their cash in anticipation of possible sterilisation of their funds by the CBN.
Meanwhile, suspicions in the industry are heading towards the hindering of the banks playing in the Foreign Exchange market speculation, and that the CBN is leveraging the funds to finance development programmes, like the rice farming and loans at nine per cent for the entertainment sector.
