Reports have it that the Central Bank of Nigeria has debited banks a total of N120.2 billion.
According to Nairametrics, the sum was deducted from banks’ as a CRR debit. So far, over N10 trillion has been sequestered from banks’ in the last year and half.
The Cash Reserve Ratio refers to a certain percentage of total deposits banks are required to maintain in the form of cash reserve with the central bank. Thus, in order to avoid such uncertainty the central bank imposes a cash reserve ratio or CRR on them by debiting their accounts with it.
According to the report, Zenith Bank topped this list with about N39 billion debited followed by Citi Bank and UBA with N16 billion and N12 billion respectively. In all, a total of 15 banks out of the 28 commercial and merchant banks had their CRR debited.
Why It’s Important
The objective of maintaining the cash reserve is essentially to prevent a scenario where there is shortage of funds in meeting the demand by the depositor. The amount of reserve to be maintained depends on the bank’s experience regarding the cash demand by the depositors.