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The largest banks in Africa’s most populous nation have restricted deposit with the Central Bank of Nigeria (CBN) to a tune of N7.17 trillion as at June 2021, as investors are piqued by the negative impact of the CRR on profitability.
That’s almost flattish when compared with the N7.13 trillion debited to the lenders’ account in 2020, data gathered by MoneyCentral shows.
Analysts say the huge amount laying fallow with the regulator is hindering banks from granting more loans to the private sectors, especially small business and manufacturers.
However, the central bank governor Godwin Emefiele said during the last Monetary Policy meeting that it is of paramount importance to curb inflation as the economy is recovering from the devastation caused by the coronavirus pandemic.
The Monetary Policy Committee (MPC) of the CBN throughout 2019 maintained a CRR of 22.5 per cent but in early January 2020, it was increased to 27.5 per cent.
The CRR is the amount the CBN debits from banks accounts in compliance with its monetary policy objective of mandatorily keeping cash on behalf of banks. The amount is not available for banks to use.
Of course, the incessant debit to the accounts of lenders for failure to meet CRR requirement and the minimum loans to deposit rules are undermining net interest income.
Guaranty Trust Bank’s restricted deposit with the central bank stood at N854.48 billion in June 2021.
Access Bank’s restricted deposit was up 14.47 percent to N1.31 trillion in June 2021 from N1.14 trillion the previous year.
First Bank Nigeria Holdings’ restricted deposit stood at N1.45 trillion in June 2021.
United Bank for Africa was debited with N1.11 trillion by the regulator in the period under review.
Zenith Bank’s restricted debit with the central bank was N1.18 trillion in June 2021.
Stanbic IBTC Holdings’ restricted deposit stood at N364.27 billion as at June 2021.