Collins Nweze, Senior Finance Correspondent
THE Central Bank of Nigeria (CBN) has been holding on to N900 billion of lenders’ deposits as Cash Reserve Ration (CRR) since January.
By the CRR policy, banks have a mandate to keep 27.5 per cent of all deposits with the CBN.
The CRR is a portion of bank’s deposit kept with the CBN for liquidity control.
Fitch Ratings has predicted a 20 per cent hit in Nigerian banks’ revenue this year due to the CRR policy and foreign exchange shortage.
It said Nigeria’s banks would face rising borrowing costs as the CBN’s measures to support naira squeeze lenders, who already hit by COVID-19 pandemic and oil price shocks.
Some banks have already indicated they expect a hit. In April, mid-tier lender Fidelity Bank warned that 2020 profits would drop by 15 per cent.
Bankers said lenders were relying on existing customers to weather the storm as new lending looked risky with the economy expected to tip back into recession.