Emmanuel Thomas, Lagos
September 25, 2015 – Central Bank of Nigeria(CBN) has called on banks to reverse the declining Gross Domestic Product (GDP) by actively stepping up their efforts in catalyzing the economy with substantial new loans to the target sectors of the economy.
“ The Committee considered that the banks and deposit money banks, must strive to reverse the slowing GDP trajectory by actively stepping up their efforts in catalyzing the economy with substantial new loans to the target sectors earlier highlighted”, the apex bank said in its communique no. 103.
The CBN Monetary Policy Committee (MPC) had advised on the urgent imperative of banks to aggressively support the efforts of government at job creation by channeling available liquidity into target growth enhancing sectors of the economy such as agriculture and manufacturing.
But feelers from the banks show that this advice is likely to go unheeded since most of the MDs in the banks are already in a fix not knowing how to get out of present predicament brought about by CBN’s economic policies.
The banks have shut-out loans to customers and the result has been reduction in income especially from export financing with many banks and firms already in the process of downsizing to cope with current economic reality.
MPC also decided by a vote of 7 to reduce the Cash Reserve Requirement (CRR) from 31 per cent to 25 per cent while 3 people voted to hold.
“By a unanimous vote, the MPC voted to retain the MPR at 13 per cent. In summary, the MPC voted to: (i) Reduce the CRR from 31 to 25 per cent; (ii) Retain the MPR at 13 per cent; (iii) Retain the symmetric corridor of 200 basis points around the MPR; and (iv) Retain the Liquidity Ratio at 30 per cent”.
The CBN’s committee warned that having seen two consecutive quarters of slow growth, the economy could slip into recession in 2016 if proactive steps were not taken to revive growth in key sectors of the economy.
