Business

CBN ceases daily cash reserve requirement, adopts updated mechanism

The Central Bank of Nigeria (CBN) is ceasing daily CRR debits and will be adopting an updated Cash Reserve Requirement (CRR) mechanism that is intended to facilitate your capacity for planning, monitoring, and aligning your records with the CBN.

 

CRR is the percentage of a bank’s total deposits that it needs to maintain as liquid cash, usually kept with the CBN. The latest initiative is intended to facilitate banks’ capacity for planning, monitoring and aligning with records with the CBN

 

This was contained in a letter to all banks titled Cash Reserve Requirement Framework Implementation Guidelines and dated February 02, 2024.

 

The determination of the segment of deposits subject to sterilization with the CBN as CRR will follow the processes outlined below:

According to the apex bank, Phase 1 means Utilization of the Incremental Approach: The extant ratio (32.5%) will be applied to increases in the banks’ weekly average adjusted deposits.

Phase 2 entails that CRR levy of 50percent 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 banks with details of the applied charges and their underlying computation rationale.

Chima Titus

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