{"id":42156,"date":"2020-08-14T08:25:30","date_gmt":"2020-08-14T07:25:30","guid":{"rendered":"https:\/\/nationalwire.com.ng\/?p=42156"},"modified":"2020-08-14T08:25:30","modified_gmt":"2020-08-14T07:25:30","slug":"banks-facing-tough-times-over-crr-policy-fitch-ratings","status":"publish","type":"post","link":"https:\/\/nationalwire.com.ng\/sub\/banks-facing-tough-times-over-crr-policy-fitch-ratings\/","title":{"rendered":"Banks Facing Tough Times Over CRR Policy-Fitch Ratings"},"content":{"rendered":"<p>Fitch Ratings, global rating agency has said that commercial banks are facing tough times due to Cash Reserve Ratio Policy limiting their capacity to grant loans to customers.<\/p>\n<p>The Central Bank of Nigeria (CBN) policy requires that CRR, which is 27.5 per cent of banks\u2019 deposits kept with the apex bank at zero interest to curb the money supply and keep inflation in check. In a report, Fitch Ratings says banks are being punished at a time when most other countries are giving lenders extra leeway to fight the economic fallout of the coronavirus.<\/p>\n<p>\u201cThe Central Bank of Nigeria has been highly interventionist,\u201d Mahin Dissanayake, senior director for Europe, Middle East and Africa bank ratings at Fitch, said.<\/p>\n<p>Where peers like South Africa and Kenya followed the global trend of giving banks more room to lend, Nigeria hasn\u2019t budged. Instead, it stuck with a CRR that compels lenders to park keep a portion of their deposits with the regulator.<\/p>\n<p>Failure to meet the threshold results in the regulator debiting banks\u2019 accounts with the shortfall. The central bank also dips into the accounts when lenders fail to extend 65 per cent of their deposits as loans, a measure that was introduced to stimulate credit.<\/p>\n<p>That and other penalties push the effective hit on capital to between 40% and 50 per cent, Dissanayake said. \u201cThe CRR is unique and hugely punitive\u201d because the cash could\u2019ve been put to better use than lying idle with the central bank.<\/p><div data-ad-id=\"32665\" style=\"text-align:center; margin-top:0px; margin-bottom:0px; margin-left:0px; margin-right:0px;float:none;\" class=\"afw afw_ad_image afw_ad afwadid-32665  \">\r\n                                                            <div style=\"font-size:10px;text-align:center;color:#cccccc;\">Advertisement<\/div>\r\n\t\t\t\t\t\t\t<a target=\"_blank\" href=\"http:\/\/www.accessbankplc.com\" rel=\"nofollow\"><img decoding=\"async\" height=\"auto\" max-width=\"100%\" src=\"https:\/\/nationalwire.com.ng\/wp-content\/uploads\/2019\/06\/Banner-1.jpg\"><\/a>\r\n                                                                        \r\n\t\t\t\t\t\t\t<\/div>\n<p>The rules \u201care aimed at two different monetary policies,\u201d he said. \u201cThey are conflicting.\u201d<\/p>\n<p>Anya Duroha, the chief executive officer of Lagos-based Nova Merchant Bank Ltd., expressed some sympathy for the central bank, which he said was \u201ctrying to solve all kinds of problems in the economy.\u201d<\/p>\n<p>A spokesman for Nigeria\u2019s central bank didn\u2019t respond to a text message seeking comment that he requested.<\/p>\n<p>Fitch revised its outlook for Nigerian banks to negative toward the end of last year as the economy started slowing and the central bank ramped up intervention.<\/p>\n<!-- AddThis Advanced Settings generic via filter on the_content --><!-- AddThis Share Buttons generic via filter on the_content -->","protected":false},"excerpt":{"rendered":"<p>Fitch Ratings, global rating agency has said that commercial banks are facing tough times due to Cash Reserve Ratio Policy limiting their capacity to grant loans to customers.<!-- AddThis Advanced Settings generic via filter on get_the_excerpt --><!-- AddThis Share Buttons generic via filter on get_the_excerpt --><\/p>\n","protected":false},"author":6,"featured_media":42157,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_exactmetrics_skip_tracking":false,"_exactmetrics_sitenote_active":false,"_exactmetrics_sitenote_note":"","_exactmetrics_sitenote_category":0,"footnotes":""},"categories":[23],"tags":[7175],"coauthors":[2391],"class_list":["post-42156","post","type-post","status-publish","format-standard","has-post-thumbnail","","category-business","tag-fitch-ratings"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v18.9 - 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