Rising from the bankers committee meeting, the commercial banks have called on the Central Bank of Nigeria (CBN) to hasten the release of the five per cent Cash Reserve Ratio (CRR) which it promised would be plagued back to the banks for increased lending to the real sector.
The CBN after its Monetary Policy Committee (MPC) meeting in November 2015 slashed the Monetary Policy Rate (MPR) otherwise known as lending rate to 11 per cent from 13 per cent and reduced its CRR from 25 per cent to 20 per cent to increase liquidity in the system.
The CBN Governor, Godwin Emefiele, at the 247th meeting of the MPC said the liquidity arising from the reduction of the CRR will only be released to the banks that are willing to channel it to employment generating activities in the economy such as agriculture, infrastructure and solid minerals.
Nnamdi Okonkwo, Managing Director & Chief Executive Officer of Fidelity while addressing the reporters after the meeting said: “When the CRR was reduced by 5 per cent, the intention was to release the amount to the banks to enable them avail the real sector borrowers at a single digit.
“We discussed around that and agreed that the Central bank will need to work out modality and hasten action towards releasing this 5 per cent drop in CRR to the bank to lend to the reel sector and we we are looking forward to making that real.”
CRR is a specified minimum fraction of the total deposits of customers, which commercial banks have to hold as reserves either in cash or as deposits with the central bank. CRR is set according to the guidelines of the Central Bank of Nigeria.
This demand is coming on the heels of reduced lending to the reel sector on account of increasing Non Performing Loan (NPL) portfolio of commercial banks which has seen around N500 billion provision on the balance sheet of commercial banks for the year ended 2015
The amount of bad loans in the banking industry rose sharply by 78.8 per cent to N649.63 billion in 2015, indicating severe deterioration in the quality of the loan portfolio of the 22 banks.
This was contained in a Central Bank of Nigeria (CBN) Staff report presented to the Monetary Policy Committee (MPC).
According to the Central Bank of Nigeria (CBN) Staff report presented to the Monetary Policy Committee
there was a general increase in bad loans (non performing loans) among the 22 Deposit Money Banks in the country.
This was despite 30 per cent decline in new loans granted by banks in 2015 to N5.78 trillion.
Also speaking at the briefing, CBN Director Banking Supervision, Tokunbo Martins disclosed the approval of two new super agents that are supposed to distribute banking products at cheaper prices which will hopefully carry banking services to the nook and cranny of this country.