The Central Bank of Nigeria (CBN) is ceasing daily Cash Reserve Requirement (CRR) debits and will be adopting an updated CRR mechanism.
This is coming at the end of a week that witnessed series of regulatory guidelines to address the currency crisis facing the country.
In a letter to deposit money banks, the apex regulator stated that the action is intended to facilitate their capacity for planning, monitoring, and aligning their records with the CBN.
The determination of the segment of deposits subject to sterilization with the CBN as CRR will now follow two processes with the first phase being utilization of the Incremental Approach: The extant ratios (commercial banks 32.5% and merchant banks 10%) will be applied to increases in the banks’ weekly average adjusted deposits.
In the second phase, CRR levy of 50% of the lending shortfall will be enforced for banks that do not meet the minimum Loan to Deposit Ratio (LDR) as contained in a correspondence to all banks referenced BSD/DIR/GEN/LAB/12/049 dated September 30, 2019.
Adetona Adedeji, Acting Director Banking Supervision Department stated that the CBN will provide banks with details of the applied charges and their underlying computation rationale.
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