CBN Mandates 50 Per Cent Cash Reserve Requirement Levy On Commercial Banks

The Central Bank of Nigeria (CBN) has made compulsory 50 Per Cent Cash Reserve Requirement Levy On Commercial Banks.

BrandNewsDay reports that the CBN has issued a 50-cent Cash Reserve Requirement levy on the lending shortfall that will be enforced for banks that do not meet the minimum Loan Deposit Ratio, LDR.

This Nigeria news platform understands that the apex bank disclosed this in a recent circular titled Cash Reserve Requirement, CRR, Framework Implementation Guidelines, which was issued to all banks in Nigeria.

According to the CBN, a fresh CRR policy has been issued to enhance the banking sector’s operational efficiency.

The banker’s bank percentage of banks’ deposits needed as cash liquidity is now 32.5 per cent of their deposits for commercial banks and 10 per cent for merchant banks.

CBN also announced the cessation of daily debits to facilitate the planning and monitoring of banks’ records.

“The Central Bank of Nigeria (CBN) is ceasing daily CRR debits, and there will be an updated Cash Reserve Requirement (CRR) mechanism that is intended to facilitate your capacity for planning, monitoring, and aligning your records with the CBN.

“The determination of the segment of deposits subject to sterilization with the CBN as CRR Will follow the processes outlined below: Phase 1-Utilization of the Incremental Approach: The extant ratios (commercial banks 32.5 per cent and merchant banks 10 per cent) will be applied to increases in the banks’ weekly average adjusted deposits.

“Phase 2 – A CRR levy of 50 per cent of the lending shortfall will be enforced for banks that do not meet the minimum Deposit Ratio (LDR) as per our correspondence to all banks referenced BSD/DIR/GEN/LAB/12/049 dated September 30, 2019.

“The CBN will provide your bank with details of the applied charges and their underlying computation rationale”, it stated.