CBN Debits Banks $1.2 bn for Missing Regulatory Targets

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By Obinna Chima with agency report

The Central Bank of Nigeria (CBN) took N460 billion ($1.2 billion) from lenders as additional cash reserves for missing regulatory thresholds, according to people familiar with the matter.

The accounts of about 25 commercial lenders held with the Central Bank of Nigeria were debited by the regulator on Thursday and Friday, the people said, asking not to be identified because the matter is confidential. It follows a similar move in April, when the regulator took 1.47 trillion naira from almost 30 lenders for falling short of cash-reserve and loan-to-deposit ratios, people familiar with the matter said at the time.

Isaac Okorafor, spokesman for the CBN didn’t answer calls to his mobile phone or reply to messages seeking comment.

The central bank in January increased the cash-reserve requirement to 27.5% from 22.5% to curtail excess liquidity in the banking sector, which it said could stoke inflation. Last year it boosted the loan-to-deposit ratio 65% in a bid to accelerate lending. Some analysts have said these are contradictory policies that are almost impossible to meet.

Governor Godwin Emefiele last month kept the cash-reserve ratio at 27.5%, which is more than 10 times that of South African banks, while unexpectedly reducing the benchmark interest rate to try and help avert a recession.