New Telegraph

Deposits higher than loans despite CBN’s credit push

Despite calls to support Africa’s largest economy to offset recession, Nigerian companies are parking more of their funds in bank deposits, upending a push by the central bank to fuel lending to support the economy, Bloomberg reported yesterday. “Many rich corporates have simply been content with saving their cash balances and collecting huge interest payments,” the Central Bank of Nigeria (CBN) said in a statement on its website yesterday.

That’s at the expense of “expanding their investment, which should lead to hiring more people and producing more goods.” According to the news agency, it also means that banks aren’t meeting a central bank requirement to use at least 65 per cent of their deposits for loans, or face penalties. The ratio dropped to 63.9 per cent in August from 68 per cent in January, as savings expanded quicker than deposits, the central bank said.

“The latest data will come as a blow to a central bank that has resorted to unconventional policies, such as banning imports of some goods to spur local manufacturing and reduce Nigeria’s reliance on the oil industry.

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