•Raises interest rate to 18%
•Says cash crunch, glitches over soon
From Uche Usim, Abuja
Amid the global shock trailing the recent collapse of Silicon Valley Bank (SBV) in the United States of America (USA) and Credit Suisse in Switzerland, the Central Bank of Nigeria (CBN) Governor, Mr Godwin Emefiele, has asked the banking public not to panic over such developments as Nigerian financial institutions are in a healthy state.
He also announced a raise in the apex bank’s benchmark lending rate from 17.5 per cent to 18 percent, in an aggressive push to contain the nation’s inflationary pressure.
Emefiele made these disclosures at a media briefing after the 147th Monetary Policy Committee (MPC) meeting.
According to him, the CBN has since put in place Prudential Guidelines for the banks, which he said have resulted in a strong buildup of not only the Cash Reserve Ratio deposit in Nigeria, but also liquidity ratio or capital adequacy ratio.
These, he noted, have brightened Nigerian banks’ strong financial stability indicators and ultimately insulated them from contagion shocks in the global financial markets which were exacerbated by the Russian-Ukraine war, deteriorating relationship between US and China and other disruptions.
He said: “Our bank’s remain insulated from the global contagion. No Nigerian bank is exposed to SVB and Credit Suisse.
“We asked for bond portfolios of banks and there is no direct investments by Nigerian banks in SBV.
Again, we have adequate buffers to ward off the contagion. The CBN has always pushed for stronger regulatory oversight and it is necessary to survive a time like this.
“Financial soundness indicators show banks are very resilient. NPLs has dropped to 4.2 percent. ROIs is 21 percent. N14 trillion in cash reserve and deposit for banks to act as cushion”.
On the MPC decisions, Emefiele said the committee agreed to raise interest rate from 18 percent, kept the asymmetric corridor at +100/-700 basis points around the MPR. It also retained the Cash Reserve Ratio (CRR) by 32.5 percent while liquidity ratio was kept at 30 percent.
On the lingering naira crunch and frequent glitches on the electronic banking channels, the CBN Governor described them as temporary discomfort, assuring that efforts were being made to boost service delivery.
“We shall continue to pump new notes into the system and we will continue to check so we don’t flood the system with excess cash, so we don’t go back to where we’re coming from. “Naira redesign has reduced money outside the banks. We are aware of cash limit pains and downtime in online banking. We have called on other stakeholders in the electronic banking space to ensure better services. Online channels do fail and it’s being resolved. Payment System Department of the CBN is overseeing this and ensuring transactions are smooth.
“At this stage, I thank some FinTech who had idle capacity and brought it to help electronic banking channels”, Emefiele added.
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