{"id":54634,"date":"2021-12-13T12:27:24","date_gmt":"2021-12-13T11:27:24","guid":{"rendered":"https:\/\/nationalwire.com.ng\/?p=54634"},"modified":"2021-12-13T12:29:13","modified_gmt":"2021-12-13T11:29:13","slug":"shareholders-seek-reduction-in-banks-mandatory-cash-reserve-ratio","status":"publish","type":"post","link":"https:\/\/nationalwire.com.ng\/sub\/shareholders-seek-reduction-in-banks-mandatory-cash-reserve-ratio\/","title":{"rendered":"Shareholders Seek Reduction In Banks\u2019 Mandatory Cash Reserve Ratio"},"content":{"rendered":"

Members of Independence shareholders Association of Nigeria (ISAN) have criticised hike in banks\u2019 mandatory Cash Reserve Ratio (CRR).<\/p>\n

In a statement on Sunday, ISAN\u2019s founder, Sir Sunny Nwosu, urged the Central Bank of Nigeria (CBN) to reduce the CRR to 15 per cent from 27.5 per cent or pay interest on the restricted deposits to the banks, noting that the banks had over N12 trillion restricted deposits with the CBN.<\/p>\n

According to Nwosu, the decision by the apex bank to review most bank charges and fees downward, coupled with the hike in the CRR, amid expectations of increasing regulatory headwinds, was currently causing a setback in the sector.<\/p>\n

CRR is a monetary policy tool used by the Central Bank of Nigeria (CBN) to control money supply in the economy.<\/p>\n

The CRR empowers the central bank to sequester up 27.5 per cent of customer deposits held by commercial banks, effectively restricting the banks from accessing the money.<\/p>\n

Explaining frther, Nwosu said: \u201cIt is noteworthy that Nigeria has the highest reserve requirement in sub-Saharan Africa. South Africa, Kenya and Ghana all have CRR\u2019s of below 10 per cent.<\/p>\n

\u201cWe believe the elevated CRR level moderated the industry\u2019s performance and liquidity position during the year under review.\u201d<\/p>\n

He added: \u201cAfter serious evaluation of the CRR, ISAN insist that CBN should pay interest to banks on restricted deposits to enhance banks obligation to the real sector.<\/p>\n

\u201cIn the alternative the apex bank should reduce the CRR to 15 per cent to enable banks declare meaningful dividends that would encourage domestic investments.<\/p>\n

\u201cWe urge CBN to have a rethink on CRR and among other things to enhance the performance of the financial sector of the economy.\u201d<\/p>\n

He said the challenge of the Nigerian economy made it imperative for CBN to pay interest on restricted deposits.<\/p>

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\u201cBanks restricted deposits with CBN are idle funds. We argue that if these funds are with banks, certainly it will enhance their earnings, loans to real sector and returns for shareholders,\u201d Nwosu said in the statement.<\/p>\n

He explained that continued debits of CRR by the CBN had put the banking sector under serious threat, noting that the apex bank was denying banks the ability to earn an income in customer deposits.<\/p>\n

A breakdown of some banks debited through the mandatory CRR showed that Zenith Bank Plc\u2019s restricted deposit with CBN rose from N680.26 billion in 2019 to N1.33 trillion in 2021, while FBN Holdings Plc\u2019s restricted deposit hit N1.32 trillion in 2020 from N843.44billion in 2019.<\/p>\n

FBN Ltd. and FBN Quest Merchant Bank Ltd. had also restricted balances of N1.3 billion and N39.37 billion respectively with CBN as at Dec. 31, 2020.<\/p>\n

Access Bank Plc\u2019s CRR deposit with CBN also grew to N1.31 trillion or an increase of 54 per cent from N848.85 billon in 2019, while Guaranty Trust Holdings Plc (GTCO) reported N1.03 trillion mandatory reserve with CBN in 2020 from N443.65 billion reported in 2019.<\/p>\n

United Bank for Africa\u2019s\u00a0\u00a0mandatory reserves with CBN also increased to N1.10 trillion in 2020 as against N832.11 billion in 2019.<\/p>\n

The National Coordinator, ISAN, Mr Anthony Omojola, said banks\u2019 interim reports in 2021 showed poor revenues following higher borrowing costs as CRR hike further complicated banks\u2019 currency flow already hit by fallout from the COVID-19 pandemic and the oil price shocks.<\/p>\n

Omojola said the CBN warehousing of about N1.2 trillion from the\u00a0\u00a0banking system since it raised the CRR by five per cent to 27.5 per cent coupled with the AMCON sinking funds called for serious concerns by all stakeholders.<\/p>\n

\u201cThat the cumulative restricted deposits of banks so far as at 2020, if invested in treasury securities at five per cent, would have N482 billion added to the industry\u2019s profit before taxationnan\u201c.<\/p>\n","protected":false},"excerpt":{"rendered":"

Members of Independence shareholders Association of Nigeria (ISAN) have criticised hike in banks\u2019 mandatory Cash Reserve Ratio (CRR)<\/p>\n","protected":false},"author":6,"featured_media":24836,"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":[23,17],"tags":[36],"coauthors":[2391],"class_list":["post-54634","post","type-post","status-publish","format-standard","has-post-thumbnail","","category-business","category-news","tag-cbn"],"yoast_head":"\nShareholders Seek Reduction In Banks\u2019 Mandatory Cash Reserve Ratio - National Wire<\/title>\n<meta name=\"description\" content=\"Members of Independence shareholders Association of Nigeria (ISAN) have criticised hike in banks\u2019 mandatory Cash Reserve Ratio (CRR)\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/nationalwire.com.ng\/sub\/shareholders-seek-reduction-in-banks-mandatory-cash-reserve-ratio\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Shareholders Seek Reduction In Banks\u2019 Mandatory Cash Reserve Ratio - 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