Emefiele frowns at banks attitude on loans to private sectors

The Governor of Central Bank of Nigeria, Godwin Emefiele has frowned at  Nigeria commercial banks attitude on their inability to give out loans to private sector.

He decries this attitude while reacting to some questions  at the Africa Investor Conference in London.

According to him, CBN doesn’t feel like banks are being restricted to give out loans by the current level of 22.5% Cash Reserve Ratio (CRR) as claimed by the banks.

ALSO READ: SEC urges defunct skyebank shareholders to claim dividend

As against the claim that banks often cite the 22.5% cash reserve ratio (the amount of deposits bank own that cannot be lent out) as a reason for not lending to as much as they would to the private sector, Emefiele said “even at 22.5%, banks still have high liquidity ratios.

“The issue doesn’t lie in reducing CRR, quote me when I tell you that the banks are lying when they say CRR is the issue”.

Emefiele also noted that CBN is going to “aggressively refocus banks to lend and is currently working on regulation for banks that would restrict their participation in zero risk instruments.”

This basically means the CBN will issue a policy that will stop banks from investing customer deposits in risk-free instruments like treasury bills and FGN Bonds.

He also claimed the regulations will be out in two weeks and claims the decision to issue one was from the Monetary Policy Committee (MPC).

This also means with banks out of the risk-free fixed income market, demand will reduce and interest rates for Treasury bills could rise.

“Banks do not lend to Private sector, yet a reduction from 30.5% to 25% in 2017 released N1 trillion in cash to banks,

“Private sector lending has averaged N15 trillion since January 2017, hovering from N15.9 trillion to N15. 2trillion between then and March 2019 respectively”, He stated.