The banking sector gained N740 billion as a result of the reduction of the Cash Reserve Ratio, CBN from 31 to 25 per cent by the Central Bank of Nigeria, CBN recently. Recall that the CRR reduction was announced by the CBN following the implementation of a Treasury Single Account, TSA that mandated all commercial banks to return all government funds in their custody to the CBN.
The Managing Director of Fidelity Bank, Nnamdi Okonkwo who disclosed this at a press briefing after the Bankers’ Committee meeting in Lagos, said that the speculations in some quarters that banks gained N1.2 trillion as a result of the CRR reduction and TSA implementation were unfounded.
According to him, “A lot of figures have been bandied around. Some said N1.2 trillion and so on. Well, the bank examiners are currently reconciling with banks on the figures they have returned but what is definite is that the N1.2 trillion being bandied around is false. The actual figure when they have been reconciled will be made known to the public. Also the CRR that was released back to the banks on account of TSA implementation was N740 billion. This is confirmed. But the amount of TSA fund that went back to CBN is not verified yet.”
He added that the movement of funds from the system on account of TSA was not intended to strangulate the banks, saying, “If you release the deposit you have, CBN who handles the monetary supply management will of course return your CRR.”
Earlier in an address, the Director Banking Supervision Department, CBN, Mrs. Agnes Tokunbo said the bankers’ committee meeting focused on how the banking industry currently manages risks and how it could sustain the gains measures so far adopted.
She said: “There have been concerns, and a lot of discussions about how the banking industry is holding up to the risks in the economy, both domestically and internationally. The committee was satisfied that the banking industry remained safe and sound. But then there was also discussion that we need to sustain this to continue having the kind of safe and sound and resilient system that we have right now.
So, the committee agreed that in addition to the measures we have in place right now, banks on their own would improve their risk management processes. They would hold sufficient capital to ensure that no matter the risks or the shock that emanates, the banks will be well prepared to bear them.”
Also speaking, Group Managing Director, FirstBank of Nigeria Limited, Bisi Onasanya said that at the meeting “(The Bankers’ Committee) evaluated the options and the decisions taken so far in respect of the management of the foreign exchange. We all agreed that the JP Morgan delisting has taken place and we should not be too worried about that.
What is important is that we have been able to, through effective demand management, managed and preserved the volume of foreign exchange reserve. We have also been able to keep the exchange rate very stable which is one of the positive impacts of the demand management and totality of the foreign exchange management positions taken by central bank.
“We all agreed that irrespective of the actions of JP Morgan or any other party, we need to reserve and manage the foreign exchange reserve for Nigeria and for Nigerians and that we cannot continue to play to the gallery but we will do what is best in the interest of Nigeria. So the Bankers’ Committee endorsed the activities.
We also agreed that we will continue to supply forex, even though we will continue to prioritise but we will prioritise and make effective supply available to key segments of the economy including manufacturing. And that we should not panic because the central bank is in good control and it is also supported by the pronouncement on the fiscal side that these are effective strategies and that we should just continue to fine tune them as the situation demands.”
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