L
LequteMan
Guest
Nigeria - According to Bisi Onasanya, CEO of First Bank Nigeria Ltd, CBN's policy is hurting the economy.
He said CBN's deposit policy is crippling the country's banking sector and causing some foreign investors to shun Africa’s largest economy.
A rule forcing banks to place 31 percent of deposits with the regulator needs to changed - the requirement should be lowered or the central bank should pay interest on the funds, he said.
“First Bank has close to 650 billion naira ($3.3 billion) sterilized at the central bank at zero percent interest. These are funds we pay interest on. So you can imagine the impact this has on our revenue-generating capabilities and our ability to fund loan obligations.” he said at a Bloomberg conference in Lagos on Thursday.
CBN in a bid to bolster the Naira had increased reserve requirements which indirectly reduces the amount of naira in circulation, helping to bolster its value.
“If the central bank must keep that level, which I feel is very high, it should be complemented with some cushioning effects,” Onasanya said.
“The central bank should consider remunerating, even at the average cost of funds, for banks to be able to meet their funding costs.”
He said CBN's deposit policy is crippling the country's banking sector and causing some foreign investors to shun Africa’s largest economy.
A rule forcing banks to place 31 percent of deposits with the regulator needs to changed - the requirement should be lowered or the central bank should pay interest on the funds, he said.
“First Bank has close to 650 billion naira ($3.3 billion) sterilized at the central bank at zero percent interest. These are funds we pay interest on. So you can imagine the impact this has on our revenue-generating capabilities and our ability to fund loan obligations.” he said at a Bloomberg conference in Lagos on Thursday.
CBN in a bid to bolster the Naira had increased reserve requirements which indirectly reduces the amount of naira in circulation, helping to bolster its value.
“If the central bank must keep that level, which I feel is very high, it should be complemented with some cushioning effects,” Onasanya said.
“The central bank should consider remunerating, even at the average cost of funds, for banks to be able to meet their funding costs.”
