By Providence Obuh

The high requirements of the Cash Reserve Ratio (CRR) f’or banks by the CBN is alarming and affecting the bank’s dividend pay out, Shareholders lament, stating that the role of the apex bank is not limited to protecting depositors alone, but to also protect investments due to the overwhelming Foreign Direct Investments (FDI) in the last three years.

Mr. Segun Owolabi, Director General, Western ICON Shareholders Association of Nigeria:

CBN as a regulator should regulate to favour all the stakeholders. CBN role is not limited to protecting depositors alone, but should protect investments as many FDI in the last three years are overwhelming. Shareholders will no longer tolerate a situation where CBN in the name of CRR keep substantial funds of investment to control liquidity in the system. Investors want appreciable returns on their investments. CRR is depriving the banks of huge working capital that would make them to lend to make profit and declare dividend for sharehiolders.

For the incoming government, if there is no reform, it is going to discourage FDI, the foreign investors can decide to withdraw their investment from the banking sector because the cash reserve requirement from the CBN is on the high side, it is a lesson or a pointer to the incoming government that there must be a reform in the CBN so that the cash requirement ratio can drop down for FDI to increase their investment.

Also the high CRR is going to discourage many investors and high network individuals will begin to divest from the bank because you can imagine banks declaring 10kobo, it is very unprecedented in the history of banks that banks are declaring such ridiculous dividend, especially First Bank ‘s which is one of the biggest bank in the country. It is a lesson for Buhari’s government to note that the first reform should be the CBN.

50 percent of the public sector fund that is with the CBN, from 15 percent they increased it to 50 percent. Private sector fund remain at 15 percent that one did not change, that is the rate that is kept with the CBN in order to arrest excess money in the system. This development will lead to constriction in the credit market.