CBN Mops Up Fresh N300bn From Banks As Liquidity Drops 

Nigeria’s interbank liquidity dropped as the Central Bank of Nigeria debited banks N300bn through the Cash Reserve Ratio requirement.

The development has led to a fall in interbank liquidity by 28 per cent.

The CRR is the share of a bank’s total deposit that is mandated by the Central Bank of Nigeria to be maintained with it in the form of liquid cash.

The inter-bank liquidity opened trading at N1bn on Monday based on the findings by THE WHISTLER. But despite the debit by the apex bank, the interbank system liquidity remained positive at N746bn.

The apex bank had in January last year increased the CRR by five per cent to 27.5 per cent, from 22.5 per cent over rising inflation figures.

Nigeria’s Inflation hit 14.89 per cent by November 2020, according to the National Bureau of Statistics.

The bank had in January maintained a Loan to Deposit Ratio at 65 per cent, an amount of customers’ deposits expected to be issued as loan.

Following the CRR policy, the CBN threatened to sanction banks who failed to meet the 65 per cent LDR with an increase in debit in their CRR to the tune of the difference in the LDR.

The penalty would force banks to keep the idle funds with the apex bank instead of trading in Foreign Exchange and Open Market Operation instruments.