CBN clarifies deductions on banks’ accounts, says not fine
The Central Bank of Nigeria (CBN) yesterday clarified that the deductions on some banks’ Cash Reserve Ratio (CRR) were not a fine but a punitive measure for their failure to abide by the regulator’s directive on the new lending regime of 60 per cent deposits to them.
The clarification was given yesterday at the end of the Bankers’ Committee’s meeting, comprising chief executives of deposit money banks (DMBs) and monitors of the financial sector, by CBN’s Director of Banking Supervision, Mohammed Abdullahi in Abuja.
He stated that the deductions were proportionate to the levels of default.He said: “ It is wrong to say the deductions are fine because the banks are not losing the money to the CBN. The only implication is (that) the amount debited would not be invested in money market instruments by them. Once the affected banks raise their lending to the deposit threshold, their accounts will automatically be credited.
“ CBN never said there is going to be a fine. The circular said at the cut-off point in the event that you don’t meet the threshold, funds would be debited from you and added to your CRR. What you have there is not a fine, neither is it a levy, but a shortfall based on the parameters set by the CBN. It is going to be a continued process.”
Abdullahi explained that the action was taken to force banks to play their fundamental role of financial intermediation, particularly to the real sector which he maintained, had suffered stunted growth and discrimination over the years.He said N860 billion was lent by the banks in three months on account on the apex bank’s new regulation, hoping that more impact was to follow in the coming years.