Professor of Finance and Capital Markets at the Nasarawa State University, Uche Uwaleke has predicted that the Central Bank of Nigeria (CBN)’s Monetary Policy Committee (MPC) may reduce the Cash Reserve Ratio (CRR) from the current 27.5% when the members meet later this month.
Cash Reserve Ratio (CRR) is the amount of funds that banks have to maintain as reserve with the CBN at all times. If the CBN decides to increase the CRR, the amount available with the banks for disbursement comes down. CBN uses the CRR to drain out excessive money from the system.
Prof. Uwaleke, however, told TheFact that the CRR reduction would help cushion the rising costs of bank operations and liquidity challenges occasioned by the COVID-19 pandemic.
Prof. Uwaleke who was the former Commissioner for Finance, Imo State, said: “the decision to stop Banks from laying off staff is a welcome development in order not to create economic hardships for the families of workers in that sector considering that government’s COVID’19 mitigation measures are geared towards protecting jobs.
“In any case, the agreement was reached with the Bankers Committee. So, I expect that the CBN and the CEOs of banks must have worked out ways to cushion the rising costs of bank operations and liquidity challenges occasioned by the pandemic.
“In addition to the forbearance package already extended to Deposit Money Banks by the apex Bank, I want to bet that the CBN’s MPC will reduce the Cash Reserve Ratio from the current 27.5% when the members meet later this month,” he said.
