CBN Debits Local Commercial Banks N8.04 Trillion in Cash Reserve Requirement

 A sum of N10 trillion in Cash Reserve Requirement (CRR) has been debited by the Central Bank of Nigeria to Deposit Money Banks for the first nine months of the year 2021.

 Through the year 2019 till date, The Central Bank’s Monetary Policy Committee has preserved CRR rate at 22.5%. The Cash Reserve Requirement (CRR) is the total amount the apex bank debits from banks to regulate monetary policy scheme.

 Data obtained from the CBN’s the money and credit statistics explained the CRR debit from the biggest privately owned commercial banks in Nigeria.

 The banks include Access Bank, GT Bank, FBN Holdings, FCMB, UBA, and Sterling Bank. The others are Union Bank, Stanbic IBTC, Fidelity Bank, and Zenith Bank Plc.

 Commercial banks in Nigeria reported an estimate of N8.04 trillion in Cash Reserve Requirement from January to September of 2021, Which is 1.60 % greater than the previous years value of N7,9 trillion for 2020

This is based on data pooled from the financial statements of the major banks listed on the Stock Exchange.

The banks include Access Bank, GT Bank, FBN Holdings, FCMB, UBA, and Sterling Bank. The others are Union Bank, Stanbic IBTC, Fidelity Bank, and Zenith Bank Plc.

Nigeria’s Central Bank by regulation forces banks to retain up to 30 per cent of their deposits in cash reserve requirement; meaning that the deposits are not accessed by the banks for loans and advances.

During the year,   an estimated N8 trillion was held by CBN as CRR debits from the 10 banks under review out of a total deposit of N34.3 trillion. This represents an average of 23.4 per cent compared to 25.7 per cent a year ago and much lower than the 27.5 per cent stipulated by the apex bank as CRR.

According to Nairametrics analysts, about N10 trillion is held by the CBN as CRR for all banks as contained in the money and credit statistics of the CBN. It was N11.1 trillion in the same period last year.

Despite the average being lower in the first nine months of the year, some banks did record a higher CRR compared to others.

Stanbic IBTC for example had about 44.6 per cent of its deposits kept with the central bank as CRR. The effect can be seen in Stanbic’s interest income over the years.

From recording an interest income of N91 billion in the first nine months of 2019, the bank’s income from interest dropped to N81.9 and N73 billion in the first nine months of 2020 and 2021, respectively. The CRR of N488 billion is also 59 per cent of its loan book of N827 billion.

Union Bank also reported a significantly higher CRR to deposits at 36.2 per cent after the apex bank kept N464 billion of its deposits. Other banks under review had CRR below the regulatory limits in the first nine months of the year.

Access Bank leads with the highest CRR of N1.37 trillion and is closely followed by Zenith bank and FBNH. They are also the top three banks in terms of customer deposits.