• Monday, June 17, 2024
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Banks begin paying remittances in dollars to customers

Banks begin paying remittances in dollars to customers

Nigerian banks have been given a mighty load of cash to lend to customers courtesy of the relaxation of the central bank’s application of the credit reserve ratio, CRR requirement which stipulates the minimum amount of cash the banks must deposit with the apex bank in Nigeria.

In a statement dated November, 30, the central bank’s Bello Hassan, director of banking supervision said, “the Central bank of Nigeria on November 30, 2020, approved the release of the excess above regulatory minimum cash reserve requirement of banks. This is part of measures to improve liquidity and support economic recovery through the increased extension of credit facilities to the real sector.”

Read also: Banks re-price deposit rates lower but not credit

This he said will be accomplished through the issuance of CBN special bills with the following features- “tenor of 90 days, subject to roll over at the instance of the CBN; zero coupons with an implied yield to be worked out by the CBN; the instrument will be traceable and will be discountable at the CBN window and finally, the instrument will qualify as liquid assets.”

It is the first time that the CBN has acknowledged it was holding cash beyond the CRR limit and this could be the most impactful action of the central bank yet a analysts have said it signals a shift from the dogged defence of the Naira which meant that the apex bank ruthlessly cleared away cash from the banking system to prevent the cash from chasing after scarce foreign exchange.

Two days ago, the CBN released rules guiding the handling of diaspora remittances as well as how customers operate their domiciliary accounts with banks.

This is a breaking story. More insight later