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Monday, July 4, 2022

CBN Debits banks N459 billion for Regulatory Infractions

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The Central Bank of Nigeria (CBN) has debited lenders a total of N459 billion for regulatory infractions related to not meeting Loan to Deposit Ratio (LDR) thresholds and Cash Reserve Ratio (CRR) limits, people familiar with the matter tell MoneyCentral.
The CBN has set a minimum LDR limit of 65 percent for lenders and a CRR of 27.5 percent.
The LDR is the percentage of customer deposits given out as loans, while the CRR refers to the minimum amount of cash banks must park at the CBN.
Lenders have in the past complained that the effective CRR often goes above the CBN regulatory limits due to wrong calculations by the regulator.
Another problem with the policy is that the CBNs high CRR (it’s the highest in Africa) is at odds with its goals of getting credit to the real sector, as banks cannot use those idle funds sitting in the CBNs vaults to create loans even as the regulator pushes for expanded growth in the economy.

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