Omodele Adigun
Out of the N2.476 trillion deducted as Cash Reserve Requirement (CRR) from the deposit money banks by their regulator, the Central Bank of Nigeria (CBN), since January, Sterling Bank Plc alone accounted for N215.5 billion.
This was disclosed by the bank in its 2020 half-year interim report published on the website of the Nigerian Stock Exchange (NSE).
According to the report, Sterling Bank states that the amount of its customer deposits now held by the CBN is N215.5 billion , which “represents mandatory reserve deposits and are not available for use in the bank’s day-to-day operations”. The CRR is the amount the CBN debits from banks’ accounts in compliance with its monetary policy objective of mandatorily keeping cash on behalf of banks. The amount is not available for the banks to use.By the CRR policy, banks have a mandate to keep 27.5 per cent of all deposits with the CBN. It was 22.5 per cent last year, but it was increased to 27.5 per cent at the Monetary Policy Committee (MPC) meeting last January. In July,the apex bank debited N216 billion from the banks as part of measures to strengthen the Naira. In June, it was N460 billion debited from the banks that failed to meet CRR targets in the previous month. This occurred barely a month after many banks were collectively debited N1.4 trillion for the same reason in April.Some banks have already forecast a decline in their profits this year due to this. For instance, Fidelity Bank warned In April that 2020 profits would drop by 15 per cent.
Fitch Ratings has also foreseen a 20 per cent hit in Nigerian banks’ revenue this year due to the CRR policy and foreign exchange (forex) scarcity.
It said that Nigeria’s banks would face rising borrowing costs as the CBN’s measures to support naira would squeeze banks already hit by COVID-19 pandemic and oil price shocks.