TSA: CBN pumps N740bn into banks
The Bankers Committee (BC) has confirmed that the Central Bank of Nigeria (CBN) has injected N740 billion as the Cash Reserve Ratio of public sector funds mopped up from commercial banks following the September15 deadline for the take-off of the Treasury Single Account (TSA).
The apex bank confirmed this at the weekend following concerns about how banks would fare in the face of the risk in the economy as fears mount that the economy could lose an estimated N492.5bn ($2.5bn) worth of investments after United States investment banker JP Morgan Chase & Co. announced it would make good its threat to delist Nigeria from its Government Bond Index for Emerging Markets (GBI-EM).
There had also been panic in the banking industry over the federal government’s decision, in strict implementation of its TSA policy, to mop up public funds from commercial banks and warehouse them in the CBN. Funds so mopped up were estimated to be around N3 trillion.
The CBN Governor, Godwin Emefiele, after the Monetary Policy Committee (MPC) meeting on Sept 22, announced that the regulator had slashed its Cash Reserve Ratio (CRR) to 25 per cent from 31 per cent but retained the Monetary Policy Rate (MPR) at 13 per cent and liquidity ratio at 30 per cent.
The CRR is a financial guideline used to set the least deposits commercial banks must hold as treasury rather than lend out.
As the CBN Director of Banking Supervision, Mrs Agnes Tokunbo-Martins told reporters after the BC’s meeting, “The Committee is satisfied that the banks are safe and sound and advises banks to improve their risk management and hold sufficient cash to mitigate any shock that may arise.”
The Managing Director of First Bank Plc, Stephen Onasanya also told the reporters that the Committee evaluated the JP pull-out and decided there must be life in the Nigerian economy after the investment banker’s hard decision. “It has happened and we have to move on. There is no need for panic as the CBN measure has helped to stabilize the exchange rate market,” Onasanya remarked.
He expressed the Committee’s satisfaction with the position of the apex bank on the issue, stressing that “the interest of the country must come first in every consideration of the regulatory authority.”
The meeting also discussed the impact of the TSA on the operation of commercial banks, amid fears that it would result in massive job loss and constrain the banks’ ability to lend to the real sector.
Fidelity Bank’s chief executive officer, Nnamdi Okonkwo noted that the fears being expressed by the public are founded on the turbulence experienced in the banking sector when the government first experimented with the idea in 1988.
Okonkwo stated that industry liquidity has remained strong after banks’ compliance with the TSA directive, which lapsed on September 24. “No bank is distressed on account of this movement,” he maintained.