- Commercial banks in the next 48 hours are expected to deposit a huge sum of N6tr into the account of the Central bank of Nigeria
- The money deposited belongs to customers and will be retained in the national vault, inaccessible for withdrawals
- CBN's instruction to commercial banks is coming amid rising inflation and excess cash in the economy
The Central Bank of Nigeria has issued 48 hours deadline to commercial banks to deposit not less than N6.96 trillion of customers' deposits into its account.
Godwin Emefiele, Governor of the Central bank of Nigeria, gave this directive on Tuesday as he announced banks are to increase their CRR to 32.5 per cent with effect from today (Wednesday, 28 September 2022).
The CRR is the percentage or proportion of a bank's total cash deposit that must be kept as reserves with the CBN.
According to Vanguard, total deposits in banks as of last month were N21.43 trillion, which would have yielded approximately N4.8 trillion CRR under the previous ratio of 22.5 per cent; the new CRR will bring at least N6.96 trillion.
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CBN gives Thursday deadline
Making the positions of the apex bank known Tuesday, 27 September 2022, after the MPC meeting, Emefiele directed all banks to comply with the new CRR by adequately funding their account, latest on Thursday, saying that CBN would ensure that each bank complies, BusinessDay reports.
“What we have done at this meeting is to say we will move CRR up by five per cent to a minimum of 32.5 per cent; that we will move MPR up by 150 basis points. That means over the last four months, we moved MPR up by over 400 basis points.
“Any bank that fails to fund their CRR to 32. 5 percent by Thursday may be stopped from participating in the FX market,” he said, adding, “we must mop up liquidity out of the vaults of the banks.”
The implication of the CBN's decision
While the CBN's decision would assist lower the quantity of cash in circulation in the economy ahead of the general elections, it will also significantly impact how much money banks have available for lending.
Commercial banks rely largely on consumer deposits to both lend to and earn from their customers.
List of African richest cities, Lagos ranks 4th with 6,300 dollar millionaires
Meanwhile, a similar report by Legit.ng revealed that Lagos is one of the cities in Africa with the highest number of millionaires.
The list shows that Lagos has over 6,300 millionaire residents and is the fourth largest in Africa.
The United States dominates the list of the world's top 20 wealthiest cities, with six American cities on the list.