The Central Bank of Nigeria has issued 48 hours deadline to commercial banks to deposit not less than N6.96 trillion of customers’ deposits into its account.
Godwin Emefiele, Governor of the Central bank of Nigeria, gave this directive on Tuesday as he announced banks are to increase their CRR to 32.5 per cent with effect from today (Wednesday, 28 September 2022).
The CRR is the percentage or proportion of a bank’s total cash deposit that must be kept as reserves with the CBN.
According to Vanguard, total deposits in banks as of last month were N21.43 trillion, which would have yielded approximately N4.8 trillion CRR under the previous ratio of 22.5 percent the new CRR will bring at least N6.96 trillion.
Emefiele words “What we have done at this meeting is to say we will move CRR up by five per cent to a minimum of 32.5 per cent; that we will move MPR up by 150 basis points. That means over the last four months, we moved MPR up by over 400 basis points.
“Any bank that fails to fund their CRR to 32. 5 percent by Thursday may be stopped from participating in the FX market,” he said, adding, “we must mop up liquidity out of the vaults of the banks.”
While the CBN’s decision would assist lower the quantity of cash in circulation in the economy ahead of the general elections, it will also significantly impact how much money banks have available for lending.
Commercial banks rely largely on consumer deposits to both lend to and earn from their customers.
