…CRR down to 20% from 25%
The Monetary Policy Committee rising up from its meeting on Tuesday reduced the monetary policy rate from 13 percent to 11 percent.
This is as it also cut the Cash Reserve Ratio (CRR) from 25 percent to 20 percent.
Briefing journalists after the MPC meeting in Abuja, CBN governor, Godwin Emefiele said the move will act as a disincentive for banks to lend to the real sector of the economy.
According to Emefiele, Deposit Money Banks (DMBs) “dump their money on CBN for doing nothing,”
“What we have found out is that banks just dump their monies with CBN rather than Len d to the real sector of the economy…..But if you want to bring your money to CBN you will only earn MPR minus 7 percent which is 4 percent, hopefully, that will be a disincentive to banks” to dump their money with the financial sector regulator.
“We had attained the end of tightening and that there was a need for the Central Bank of Nigeria to be seen to play its role as monetary policy regulators. To put in place policies that would stimulate growth and to create employment moderate prices and control inflation in the economy.”
Unfortunately, we thought that by allowing the banks to have free access to the liquidity that the funds will be channeled to those sectors that would support growth, stimulate development and reduce the level of unemployment.
Going forward, Emefiele insisted that, funds that would be injected into the system would be monitored to ensure that banks utilized them for the purposes they were released.
He said: funds that are going to be injected into the system we will ensure that those funds are directed to the real sector, the infrastructure sector, the agricultural sector as well as the solid mineral sector where we think that we have a lot of potential that will support export so that we can also generate revenue.
“When we release modalities to the banks for its operation and we will identify which companies or which sectors fall within what we categories as real,sector, we are going to identify which business’s that we need to stimulate agriculture and we will see that the banks comply.”
He noted that the new policy of the Apex Bank will compel banks to act in line with the policy direction of the Bank and the government.
In addition, the Apex bank governor debunked claims that 3 Nigerian banks has liquidity problems.
Emefiele insisted that having conducted its in-house stress test on all banks in the country it discovered that “No Nigerian bank has capital adequacy problem”.
On why the CBN stopped disbursing the N220 billion power intervention fund, Emefiele said it was influenced by the decision of the National Electricity Regulatory Commission (NERC) to reverse increase in tariff. This is as it added that when it resumes the disbursement of the fund, there condition for DISCOs to access the funds would still be the same.
-New Horizon Newspapers
