Commercial Banks Seek More Cash From CBN

Commercial banks have called on the Central Bank of Nigeria, CBN, to expedite action on the release of the five per cent Cash Reserve Ratio, CRR, which it promised the banks for increased lending to the real sector.
The financial institutions made this call after the bankers committee meeting. This demand is coming on the heels of reduced lending to the real sector on account of increasing Non Performing Loan (NPL) portfolio of commercial banks which has seen around N500 billion provision on the balance sheet of commercial banks for the year ended 2015.

The CBN after its Monetary Policy Committee, MPC,  meeting in November 2015 slashed the Monetary Policy Rate, MPR, otherwise known as lending rate to 11 per cent from 13 per cent and reduced its CRR from 25 per cent to 20 per cent to increase liquidity in the system.

The CBN Governor, Godwin Emefiele, at the 247th meeting of the MPC said the liquidity arising from the reduction of the CRR will only be released to the banks that are willing to channel it to employment generating activities in the economy such as agriculture, infrastructure and solid minerals.

However, Managing Director & Chief Executive Officer of Fidelity, Nnamdi Okonkwo, while addressing the newsmen after the meeting said: “When the CRR was reduced by 5 per cent, the intention was to release the amount to the banks to enable them avail the real sector borrowers at a single digit.

“We discussed around that and agreed that the Central bank will need to work out modality and hasten action towards releasing this 5 per cent drop in CRR to the bank to lend to the real sector and we we are looking forward to making that real.”

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