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CBN to drain N568bn from bank accounts, lenders scramble for funds

The Central Bank of Nigeria (CBN) on Wednesday advised banks it would drain a combined N568 billion ($43 billion) from their accounts to meet the 500 basis-point hike in cash reserve requirements on private sector deposits with lenders.

The planned withdrawal triggered a scramble for funds in the interbank lending market, where the cost of borrowing among banks almost doubled, dealers said.

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The overnight interbank borrowing rate closed at 20 percent on Wednesday compared with 10.25 percent on Tuesday.

The bank central bank hiked the CRR on private sector deposits to 20 percent from 15 percent previously at its monetary policy committee meeting on Tuesday. It also raised interest rates by 100 basis points, the first change in more than two years.