CBN Implements New Reserve Requirement Structure, Ceases Daily CRR Debits

CBN Implements New Reserve Requirement Structure, Ceases Daily CRR Debits

In a significant move, the Central Bank of Nigeria (CBN) has introduced an updated Cash Reserve Requirement (CRR) mechanism, resulting in the discontinuation of daily CRR debits. The decision was confirmed through a letter signed by the Acting Director of the Banking Supervision Department, Adetona Adedeji…..READ MORE

The CBN has concurrently urged Deposit Money Banks (DMBs) to comply with the Loan/Deposit Ratio, providing an explanation in a communication addressed to the banks. The primary objective is to enhance the banks’ ability to plan, monitor, and align their records with the CBN.

Adedeji outlined the two-phase process for determining deposits subject to sterilization with the CBN as CRR. The Incremental Approach, constituting the first phase, applies the existing ratios (32.5% for commercial banks and 10% for merchant banks) to any increases in the banks’ weekly average adjusted deposits.

In the second phase, banks failing to meet the minimum Loan-to-Deposit Ratio (LDR) will face a CRR levy, amounting to 50% of the lending shortfall. This requirement was communicated to all banks in a correspondence dated September 30, 2019, with the reference BSD/DIR/GEN/LAB/12/049.

The CBN affirmed its commitment to providing comprehensive information to banks regarding the imposed charges and the rationale behind their calculation.