CRR: ISAN expresses concern over continuous debit of banks by CBN

By Merit Ibe and Chinwendu Obienyi

The Independent Shareholders Association of Nigeria (ISAN) has said that the continuous debit of banks under Cash Reserve Requirement (CRR) by the Central Bank of Nigeria (CBN) might put the banking sector under serious threat and a compelling impotency toward sustainable intervention in the real sector.

This is even as the association said that the CRR positioned to complement the Open Market Operation (OMO) in managing excess liquidity in the banking system in recent times has failed.

Speaking to newsmen during a press conference in Lagos recently, the Chairman, ISAN, Sunny Nwosu, lamented that there has been multilayer fleecing of Nigerian banks, explaining that the recent increase of CRR by five per cent to 27.5 per cent as against 22.5 per cent has not also yielded the desired economic results after the first phase of COVID-19. 

Nwosu added that available data showed 10 banks were cumulatively debited N4.95 trillion and N7.78 trillion respectively in CRR between 2019 and 2020 alone. He also pointed out that as retail investors, ISAN suggests either a reduction of CRR to about 15 per cent or pay three per cent interest on the restricted banks’ deposits. 

The chairman noted that continuous debit of banks under CRR by CBN was putting the banking sector under serious threat and a compelling impotency toward sustainable intervention in the real sector.

“ISAN is worried about the state of commercial banks and safety of local portfolio investors’ investments following the repeated fleecing of the banking industry by CBN.”

Nwosu said CRR is a forced replication of what the Asset Management Corporation of Nigeria (AMCON) earlier did in the banking sector where six commercial banks paid N155.45 billion into an idle sinking fund between 2015 and 2017.

“Banks also have continued to pay. The AMCON January 1, 2011, sinking fund agreement, with banks requiring CBN to contribute N50 billion and banks an equivalent of 0.5per cent of their total assets annually for 10 years, has elapsed on January 2, 2021.”