Nigeria’s regulatory bank, Central Bank Bank of Nigeria (CBN) says it will refund, in 100 percent, commercial banks’ total deposits kept as reserve cash with it in attempt to spur real sector credit growth.
Commercial banks keep 22.5 percentage ratio of their total capital with the CBN as Cash Reserves, but the bank now says the funds would be released to banks that bring proposal for funding of new projects or expansion of existing ones in agriculture and manufacturing sectors.
“To spur bank lending to high-impact sector, the bank, at its July 2018 MPC, pledged to refund CRR to banks under certain conditions. Banks that bring proposal for funding of new projects or expansion of existing ones in agriculture and manufacturing sectors will, accordingly, qualify for CRR refund of up to 100 percent. It is our expectation that banks would use this opportunity to expand credits to the real sector,” the CBN governor, Godwin Emefiele said late Friday in Lagos.
“If we continue to support the growth of small holders farmers, as well as help to revive palm, oil refineries, rice mills, cassava and gelato processing factories, you can only imagine the amount of wealth and jobs that will be created in the country,” he said.