The CRR which represents banks’ cash reserves for purposes of meeting cash obligations on demand was moved from 32.5 percent to 45 percent in apparent bid to curtail inflation.

Meanwhile, Financial Vanguard learnt that the apex bank is now working with some foreign portfolio investors, FPIs, to address concerns over recent reforms introduced in the foreign exchange market as well as the 400 basis points hike in the Monetary Policy Rate, MPR.

This is one of the outcomes of a virtual meeting, tagged Foreign Portfolio Investors Call, organised in collaboration with NGX Group, which was addressed by the CBN Governor, Mr. Olayemi Cardoso, Deputy Governor, Economic Policy, Mohammad Abdullahi, and moderated by the Group Managing Director/CEO of NGX Group, Mr. Temi Popoola.

While speaking at the meeting with FPIs in response to inquiries about the impact of the hike on banking system liquidity, CBN Deputy Governor  Abdullahi said that the banking system has a shortfall of N5 trillion to meet the 45 per cent CRR.

He, however, said that the apex bank will not debit the banks N5 trillion at once adding that the apex bank will implement the new CRR in a way that will not be disruptive to the industry.

He disclosed prior the MPC decision, the effective CRR for the industry was close to 40 per cent.
He added some banks already have surpassed the 45 per cent CRR and they would be refunded the excess while banks with shortfall will have build up their cash reserves.
 
Excess liquidity

The estimated N5.0trillion which represented the outstanding system liquidity in excess of the initial CRR range is expected to impact the liquidity of many banks adversely.