CBN sequesters N349.72 billion from banks in new CRR debits

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The Central Bank of Nigeria (CBN) has hit twenty-three (23) financial institutions with a debit of N349.72 billion in Cash Reserve Requirement (CRR) related sequesters.

Sources informed Nairametrics that these debits occurred towards the end of last week, as the apex bank intensifies its effort in mopping liquidity amid rising inflation. The recent action by the CBN is sequel to a debit of N226 billion recorded a month ago, as reported by Nairametrics.

The top 10 affected banks are; Zenith Bank (N65 billion), GTBank (N63 billion), Stanchart (N55 billion), Citi (N35 billion), Access Bank (N33 billion), FBN (N16 billion), UBA (N15 billion), Union Bank (N10 billion), Stanbic (N8 billion), and Fidelity Bank (N7 billion).

The chart for the CRR debits of all financial institutions is graphically depicted below.

Source: Nairalytics

Why this matters

The CRR is an important monetary policy tool used by the CBN to regulate the economy. It is pertinent because amongst others, it helps the apex financial institution to redirect focus to other strategic sectors of the economy such as the real sector, a goal that aligns with that of CBN.

The CRR is also an important tool in managing the country’s foreign exchange liquidity since the whittling down of CBN’s OMO borrowing.

What you should know

• Nairametrics gathered that CRR debits have been frequent since late last year.
• In addition, CBN increased the rate from 22.5% to 27.5% in January 2020, with the aim of addressing monetary-induced inflation, whilst retaining the benefits of its Loan to Deposit Ratio (LDR) .