Shareholders decry effect of Cash Reserve Ratio on banks

Hiseasnetwork1个月前Internationality69
Shareholders under the aegis of Independence Shareholders Association of Nigeria (ISAN) have expressed displeasure at high Cash Reserve Ratio (CRR) and likely erosion of bank's revenue. Shareholders decry effect of Cash Reserve Ratio on banksShareholders under the aegis of Independence Shareholders Association of Nigeria (ISAN) have expressed displeasure at high Cash Reserve Ratio (CRR) and likely erosion of bank’s revenue.

With over N12 trillion restricted deposit with the Central Bank of Nigeria (CBN), the shareholders urged the apex bank to reduce the CRR drastically or pay interest on idle funds.

At a press conference in Lagos at the weekend, the founder of ISAN, Sunny Nwosu, said the decision by the apex bank to review most bank charges downward, coupled with the hike in the CRR amid headwinds constitute a setback in the sector.

The CRR rule empowers the Central Bank to hold up to 27.5 per cent of customer deposits held by commercial banks, restricting the banks from accessing the money.

“The apex bank since 2019, debited banks a chunk of their deposits in the form of CRR. It is noteworthy that Nigeria has the highest reserve requirement in sub-Saharan Africa. South Africa, Kenya and Ghana all have CRR’s of below 10 per cent. We believe the elevated CRR level moderated the industry’s performance and liquidity position during the year under review,” Nwosu said.

The CBN Governor, Godwin Emefiele, admitted the decision was part of efforts to curb excess liquidity in the banking system and check inflationary pressure.

According to Nwosu, the tight monetary policies of the CBN have continued to pummel the banking sector with knock-on effects on the equities market.

He said: “After serious evaluation of the CRR and current AMCON scam, ISAN insists that CBN should pay interests to banks on restricted deposits to enhance banks’ obligation to the real sector.

In the alternative, the apex bank should reduce the CRR to 15 per cent to enable banks to declare meaningful dividends that will encourage domestic investments.

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