Omodele Adigun with agency report
Just as news filtered out at the weekend that the Central Bank of Nigeria (CBN) has again debited N216 billion from the banks, some shareholder groups have warned the apex bank not to push the banks into suicide.
A foreign news portal had reported at the weekend that CBN collected the money from banks with excess cash holdings as part of measures to strengthen the Naira. An action that caused a spike in money market rates.
But in his reaction to the unending deductions, the President of Progressive Shareholders Association of Nigeria (PSAN), Mr Boniface Okezie, called on the apex bank not to push the banks into sudden death. Okezie was among the shareholders who aired their views while speaking to NextMoney magazine during its virtual editorial board meeting anchored in Lagos.
Banking sources had told Reuters that the liquidity withdrawal came before a foreign currency auction on Friday. “The central bank is trying to manage the foreign exchange rate using the CRR (Cash Reserve Ratio),” one banker said, adding the debits had become frequent and over the 27.5 per cent limit.
He explained that offshore lenders were the most hit by the levies since they don’t operate retail business and are debited from their corporate deposits or borrowings.
Just last month, N460 billion was debited the banks that failed to meet the CRR targets. This occurred barely a month after many banks were collectively debited N1.4 trillion for the same reason in April. Condemning these actions, Okezie said it was counter-productive to enforce such policy when the banks were battling with dwindling deposits, possible rise in non-performing loans, dwindling profitability and low return on investment.
He stated: “This is not the time to enforce such policy; the CBN should allow the banks to breathe because businesses are in great trouble and the banks are battling for survival. Customers are not depositing because they are virtually not doing business; everything is at a standstill; small and medium enterprises are dying. Where will the banks get the fund to invest and support the real sector?” The CBN should not push the banks into suicide because the pressure is already severe on them.”