CBN raises interest rate by which banks can offer customers loan to 24.75%

The Central Bank of Nigeria (CBN) has once again increased the Monetary Policy Rate (MPR), its benchmark interest rate by 200 basis points to 24.75 percent from 22.75 per cent.

While speaking to the media on the outcome of the 294th Monetary Policy Committee (MPC) meeting in Abuja, on Tuesday, March 26, 2024, the governor of CBN, Mr Olayemi Cardososo, disclosed an adjustment of the asymmetric corridor around the MPR to +100/-300 basis points

According to him, the Cash Reserve Ratio (CRR) of commercial banks was retained at 45 percent, while the CRR for merchant banks was increased to 14 percent from 10 per cent. The Liquidity Ratio of banks however remained at 30 percent.

Cardoso added that members of the MPC were faced with continuing with the tightening cycle or a hold to see further impact of last month’s MPR hike but at the end, after reviewing the balance of risks, it was decided that a further tightening was the way to go.

The CBN boss said: “We got a reputable audit firm to look into the documents and they did a thorough job and came out to say that a number of these transactions did not qualify.

I have said this before. In some cases you have allocations of millions of dollars which were never requested.

“You also had cases where there were requests but no Naira backing, yet were allocated foreign exchange. And the list goes on. Those were some of the infractions. It was for those reasons that we refused to validate those transactions.

“Apart from the fact that documentation was not satisfactory, in many cases, they were outright illegal. The law enforcement agencies are now looking at those transactions that as far as we are concerned, were not valid to be paid.

“I would emphasise that if there is any information to the contrary, we would in due course consider that. But as at today, that is exactly where we stand. The law enforcement agencies are taking a very hard look into those transactions.

“I have said it before and I will say it again, that the valid transactions, as far as, the CBN is concerned, have been taken care of. We are also not unmindful that, just maybe, some stakeholders may have some backlog over a period of time or the other. We are not unmindful of that. Some may go back years over a period of time.

“We have done what we can to make the market open, transparent and liquid as much as possible. So those particular stakeholders are free to access the market."

BEB