Close Menu
    Facebook X (Twitter) Instagram
    Trending
    • Tinubu Approves 15% Import Duty On Petrol, Diesel
    • Alleged Impeachment Plot: Bayelsa Deputy Governor Sues State Assembly, IGP, Others
    • All Enugu House of Representatives Members Defect To APC
    • Policeman, Five Others Dead As Trucks Collide On Lagos-Ibadan Expressway
    • Bank MD Sentenced To Five-Year Jail Term Over Alleged ₦32m Fraud
    • Coup Plot: Military Probes N45bn NDDC Cash Transfers To Detained Soldiers
    • FG Shortlists Candidates For NSCDC, Immigration, Fire Service Recruitment
    • Ecobank $42m Fraud: Court Adjourns Case Against Briton, Indians To January 27
    Facebook X (Twitter) Instagram
    NEWS POINT NIGERIANEWS POINT NIGERIA
    UBA 720X90
    • HOME
    • NEWS

      Tinubu Approves 15% Import Duty On Petrol, Diesel

      October 30, 2025

      Alleged Impeachment Plot: Bayelsa Deputy Governor Sues State Assembly, IGP, Others

      October 30, 2025

      All Enugu House of Representatives Members Defect To APC

      October 30, 2025

      Policeman, Five Others Dead As Trucks Collide On Lagos-Ibadan Expressway

      October 30, 2025

      Bank MD Sentenced To Five-Year Jail Term Over Alleged ₦32m Fraud

      October 30, 2025
    • COLUMN

      Dr Madu, The Shamaki Of Fika, Who Became A Doctor Through Providence – By Dr Hassan Gimba

      October 26, 2025

      Fashola’s Reality Check For APC Leadership – By Kazeem Akintunde

      October 26, 2025

      ‘Why Nigeria Needs More Universities, After All’ (2) – By Martins Oloja

      October 26, 2025

      Africa’s Power Addiction – By Jonathan Nda-Isaiah

      October 25, 2025

      Aparutu And His Life Coach – By Azu Ishiekwene

      October 24, 2025
    • EDUCATION

      FG Names Prof. Adamu Acting Vice-Chancellor To Steer UniAbuja For Three Months

      August 9, 2025

      13 Countries Offering Free Or Low-Cost PhD Programmes For Non-Citizens

      January 25, 2025

      NECO: Abia, Imo Top Performing States In Two Years, Katsina, Zamfara Come Last

      October 3, 2024

      NBTE Accredits 17 Programmes At Federal Polytechnic Kabo

      August 20, 2024

      15 Most Expensive Universities In Nigeria

      May 19, 2024
    • INTERNATIONAL

      Gaza’s Dr Hussam Abu Safia Still Held By Israel With No Sign Of Release

      October 30, 2025

      Over 100 Killed In Rio Police Crackdown On Powerful Narco Gang

      October 30, 2025

      Israel Kills 20 In Gaza attacks, Hamas Delays Handover Of Captive’s Remains

      October 29, 2025

      North Korea Test-Fires Cruise Missiles As Trump Visits South Korea

      October 29, 2025

      Despite Ceasefires, Israel Continues Attacks Around The Region

      October 28, 2025
    • JUDICIARY

      FULL LIST: Judicial Council Recommends Appointment Of 11 Supreme Court Justices

      December 6, 2023

      Supreme Court: Judicial Council Screens 22 Nominees, Candidates Face DSS, Others

      November 29, 2023

      FULL LIST: Judicial Commission Nominates 22 Justices For Elevation To Supreme Court

      November 16, 2023

      Seven Key Issues Resolved By Seven Supreme Court Judges

      October 26, 2023

      FULL LIST: CJN To Swear In Falana’s Wife, 57 Others As SANs November 27

      October 12, 2023
    • POLITICS

      What Peter Obi May Lose If He Joins Coalition As VP Candidate

      May 25, 2025

      Atiku Moves To Unseat Wike’s Damagum As PDP Chairman, Backs Suswam As Replacement

      April 15, 2024

      Edo’s Senator Matthew Uroghide, Others Defect To APC

      April 13, 2024

      Finally, Wike Opens Up On Rift With Peter Odili

      April 2, 2024

      El-Rufa’i’s Debt Burden: APC Suspends Women Leader For Criticising Kaduna Gov

      March 31, 2024
    • SPORTS

      Missing $1.2m FIFA Fund: Ex-NFF President, Pinnick Blames COVID, Says Project Fully Audited

      October 30, 2025

      Carabao Cup: Palace Stun Slot’s Liverpool, Arsenal, City, Chelsea Get To Quarter Finals

      October 30, 2025

      Reps Set To Probe Nigerian Football Federation Over FIFA Grants

      October 29, 2025

      Super Falcons Seal 2026 WAFCON Qualification With 3–1 Aggregate Win Over Benin

      October 29, 2025

      Peter Obi Slams NFF Over Abandoned FIFA-Funded Stadium As Fresh Allegations Of Misused Funds Surface

      October 28, 2025
    • MORE
      • AFRICA
      • ANALYSIS
      • BUSINESS
      • ENTERTAINMENT
      • FEATURED
      • LENS SPEAK
      • INFO – TECH
      • INTERVIEW
      • NIGERIA DECIDES
      • OPINION
      • Personality Profile
      • Picture of the month
      • Science
      • Special Project
      • Videos
      • Weekend Sports
    NEWS POINT NIGERIANEWS POINT NIGERIA
    UBA 720X90
    Home - Cash Crunch Looms Nationwide Over CBN’s 50% CRR On Banks

    Cash Crunch Looms Nationwide Over CBN’s 50% CRR On Banks

    By Maimuna Bashir IsaJune 19, 2025
    CBN

    AHEAD of next month’s Monetary Policy Committee meeting, a new research note by Renaissance Capital has revealed that Nigeria’s banking sector is facing a severe liquidity crunch following the Central Bank of Nigeria’s decision to impose a 50 per cent Cash Reserve Ratio, a move analysts say is at odds with the country’s ambition of achieving a $1tn economy by 2030.

    His Royal Highness

    A new report by investment bank, Renaissance Capital, has warned that the higher CRR requirement, described as the highest in the world, has significantly restricted banks’ ability to lend, threatening credit growth and turning market sentiment on Nigerian banks from bullish to bearish in the short term.

    The research note, seen by this newspaper on Tuesday, said, “In our view, the CBN’s decision to raise the Cash Reserve Ratio to 50 per cent while simultaneously mandating banks to recapitalise to support lending for a $1tn economy by 2030 appears contradictory. While the recapitalisation directive aims to strengthen banks’ capacity to lend, the 50 per cent CRR severely restricts their ability to deploy funds, effectively undermining the policy’s intent.

    UBA

    “The feasibility of the $1tn GDP target is questionable, given that a core rationale for recapitalisation was to spur credit growth, an outcome now constrained by the CRR’s liquidity drain. With CRR at 50 per cent and the liquidity ratio at 30 per cent, banks are left with only 20 per cent of customer deposits available for lending, well below the regulatory Loan-to-Deposit Ratio benchmark of 50 per cent.

    “This structural limitation makes it challenging for banks to meet domestic lending targets, even with higher capital buffers. Notably, banks currently maintaining LDRs above 20 per cent are likely doing so through deposits sourced from international operations, which remain unaffected by the CBN’s domestic CRR policy. This policy mix creates conflicting incentives. While recapitalisation seeks to expand lending capacity, the CRR hike stifles liquidity, forcing banks to prioritise balance sheet management over credit expansion. Unless adjusted, these measures risk stifling the very growth they were designed to support.”

    Independence Day

    According to Renaissance Capital, the CBN’s simultaneous push for bank recapitalisation to support lending capacity and its aggressive liquidity mop-up through the 50 per cent CRR presents a conflicting policy stance.

    “While the recapitalisation directive aims to strengthen banks’ capacity to lend, the 50 per cent CRR severely restricts their ability to deploy funds, effectively undermining the policy’s intent,” the report stated.

    Happy Birthday

    The CRR is the percentage of a bank’s total deposits that must be kept with the CBN and not used for lending or investment. The apex bank had previously employed discretionary CRR debits, but its shift to a uniform 50 per cent requirement is now drawing criticism from financial experts and market analysts.

    Renaissance Capital estimates that Nigerian banks lost a staggering N840.2bn in income in the 2024 financial year due to the new CRR policy, surpassing the cumulative N862.1bn lost under the old discretionary framework between 2020 and 2023.

    Nigerian TAX Reform - Federal Goverment

    “Moreover, our estimates indicate that our covered banks incurred N840.2 billion in lost income during FY24 alone, compared to N862.1 billion in cumulative estimated losses during the FY20-FY23 period.

    “This FY24 loss figure suggests that the 50 per cent CRR regime is proving more detrimental to banks’ profitability and liquidity than the previous discretionary CRR framework,” the analysts said.

    The firm said the current policy has moved Nigerian banks “from frying pan to fire.”

    National Orientation Agency Page UP
    National Orientation Agency - Down

    “Unless adjusted, these measures risk stifling the very growth they were designed to support,” the report warned.

    The policy, introduced amid efforts to recapitalise banks for Nigeria’s long-term economic transformation, is said to be choking the same institutions expected to drive lending and economic expansion.

    The firm noted that banks that are currently maintaining lending ratios above 20 per cent are able to do so by leveraging deposits from foreign subsidiaries, which are not affected by the CBN’s domestic CRR rules.

    Rano Capital

    “Domestic operations, however, are being suffocated,” the report said. Renaissance Capital is now calling on the CBN to revise its stance, recommending a reduction in CRR to boost liquidity and operational efficiency.

    “A CRR reduction would enhance banking sector liquidity, reduce reliance on commercial paper issuance for liquidity management, and improve overall financial system efficiency,” it said.

    The investment bank also called for regulatory reforms to accompany any such relief, including tougher non-performing loan disclosures modeled after the Bank of Ghana’s policy, which mandates public listing of individual loan defaulters in annual reports.

    While acknowledging the CBN’s intent to stabilise the financial system, Renaissance warned that banks need “breathing space” to carry out recapitalisation and other reforms without losing their ability to support the economy.

    “The CBN’s recent measures requiring banks to pause dividend payments, defer management bonuses, and halt foreign subsidiary investments effectively force the banking sector to bite the bullet. However, these institutions now require operational breathing space to implement these changes effectively.

    “From an operational perspective, a CRR reduction would enhance banking sector liquidity, reduce reliance on commercial paper issuance for liquidity management, and improve overall financial system efficiency. A CRR reduction should be followed by more stringent non-performing loan disclosures. The CBN should take a leaf from the Bank of Ghana’s recent policy directive on listing of individual defaulted loans in annual audited accounts, alongside other measures,” the note said.

    With the Monetary Policy Committee scheduled to meet again in July, all eyes are on the CBN for possible policy recalibration that could ease pressure on the sector and reignite credit growth. The report further noted that banks are likely to embark on share reconstruction exercises to reduce the number of shares outstanding post-recapitalisation

    “Post-recapitalisation, we could see Nigerian banks embarking on share reconstruction exercises to reduce the number of shares outstanding. Banks with a large number of shares (exceeding 50 billion shares) could restructure their shares to improve their EPS and DPS. The two major tier-II banks (Fidelity Bank and FCMB) are more likely to embark on this to reduce their shares outstanding as they would have a material number of shares post-recapitalisation.”

    Banks CBN CRR
    Share. Facebook Twitter WhatsApp LinkedIn Telegram Email

    Related Posts

    Tinubu Approves 15% Import Duty On Petrol, Diesel

    October 30, 2025

    Alleged Impeachment Plot: Bayelsa Deputy Governor Sues State Assembly, IGP, Others

    October 30, 2025

    All Enugu House of Representatives Members Defect To APC

    October 30, 2025

    Policeman, Five Others Dead As Trucks Collide On Lagos-Ibadan Expressway

    October 30, 2025
    Add A Comment
    Leave A Reply Cancel Reply

    Latest Posts

    Tinubu Approves 15% Import Duty On Petrol, Diesel

    October 30, 2025

    Alleged Impeachment Plot: Bayelsa Deputy Governor Sues State Assembly, IGP, Others

    October 30, 2025

    All Enugu House of Representatives Members Defect To APC

    October 30, 2025

    Policeman, Five Others Dead As Trucks Collide On Lagos-Ibadan Expressway

    October 30, 2025

    Bank MD Sentenced To Five-Year Jail Term Over Alleged ₦32m Fraud

    October 30, 2025
    Advertisement
    WIDGET ADS
    News Point NG
    © 2025 NEWS POINT NIGERIA Developed by ENGRMKS & CO.
    • Home
    • About us
    • Disclaimer
    • Our Advert Rates
    • Privacy Policy
    • Terms of Use

    Type above and press Enter to search. Press Esc to cancel.

    Join Us On WhatsApp