CBN discontinues daily cash reserve debits for commercial banks

The Central Bank of Nigeria (CBN) has announced the suspension of daily Cash Reserve Requirement (CRR) debits for banks.

In a circular issued on Friday, addressed to all banks with Ref: BSD/DIR/PUB/LAB/016/027, the apex bank said that it would be adopting an updated Cash Reserve Requirement (CRR) mechanism which it said was intended to facilitate banks’ capacity for planning, monitoring and aligning their records with the CBN.

The circular signed by Acting Director, Banking Supervision Department Dr Adetona S. Adedeji is titled: “Cash Reserve Requirement Framework Implementation Guidelines”

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The document partly read: “The determination of the segment of deposits subject to sterilisation with the CBN as CRR will follow the processes outlined below

“Phase 1- Utilisation 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.

“Phase 2-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 per our correspondence to all banks referenced BSD/DIR/GEN/LAB/12/049 dated September 30, 2019.

“The CBN will provide your bank with details of the applied charges and their underlying computation rationale”.

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