The Monetary Policy Committee (MPC) has directed the Central
Bank of Nigeria (CBN) to introduce measures that will reduce deposits money
banks’ access to government secured treasury bills.
The MPC frowned at the banks’ low appetite to invest in the
productive sectors of the economy, prefering to lend to the government.
Thus rising from its May 2019 MPC Meeting, the committee
said this practice must stop as it adds little value to grow the economy.
“The MPC has frowned at that and has directed the management
of CBN to put in place policies or regulations that will restrict the banks
from unlimited access to government securities,” the CBN Governor, Mr. Godwin
Emefiele told journalists yesterday during the MPC press briefing.
Meanwhile the MPC for the second consecutive time retained
the lending rate at 13.50 percent, retained the asymmetric corridor of
+200/-500 basis points around the MPR; retained the Credit reserve ration at
22.5 per cent; and retained the Liquidity Ratio at 30 per cent.
The MPC feels maintaining the monetary policy rate at its
present level was essential for better understanding of the momentum of growth
before determining any possible modifications.
They also felt that retaining the current policy stance
provides an avenue for evaluating the impact of the Bank’s intervention
policies to support lending to the priority sectors of the economy.
The MPC reckoned the banks have abused the Treasury bill
investments window and have refused to work to stimulate growth.
“Yes, according to our own regulation there is a particular
minimum percentage of Treasury Bills or Treasury Security or government
securities that a bank must invest in order to remain liquid.
We have observed, and unfortunately and increasingly so that
the banks, rather than even focusing on granting credit even to the private
sector, they tend to direct their focus mainly to buying government
securities,” Mr. Emefiele said.
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