CBN DEFENDS 75% CASH RESERVE RATIO ON PUBLIC SECTOR DEPOSITS

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By: Muftau Fatimo

The Central Bank of Nigeria (CBN) has defended its decision to impose a 75 per cent Cash Reserve Ratio (CRR) on non-Treasury Single Account public sector deposits, saying the policy is aimed at improving liquidity management and curbing inflationary pressures.

The Director of the CBN’s Stakeholder Engagement and Institutional Relations Department, Hakama Sidi-Ali, explained the policy during the CBN Listens Programme held in Ibadan, Oyo State, on Thursday.

The apex bank introduced the 75 per cent CRR on non-Treasury Single Account public sector deposits at its 302nd Monetary Policy Committee meeting held on September 22 and 23, 2025.

In a statement issued on Friday, the CBN said Sidi-Ali highlighted the measure as part of its broader efforts to manage liquidity in the banking system and mitigate inflationary pressures.

The Cash Reserve Ratio is the proportion of deposits that banks are required to keep with the central bank instead of using the funds for lending and other financial activities.

The policy is designed to reduce excess liquidity in the banking system and strengthen the transmission of monetary policy. However, it also restricts the amount of funds banks can deploy from the affected deposits.

Sidi-Ali said the CBN, under Governor Olayemi Cardoso, had continued to implement monetary and financial sector reforms to restore macroeconomic stability, strengthen financial markets and boost confidence in the economy.

She identified the unification of exchange rates and the introduction of the Bloomberg BMatch trading system as measures aimed at improving transparency and efficiency in foreign exchange transactions.

The director also described the banking sector recapitalisation programme as a significant milestone, noting that it had strengthened banks’ capital adequacy, resilience and capacity to support economic growth.

Other initiatives highlighted included the Non-Resident Bank Verification Number, designed to improve banking access for Nigerians living abroad, and the Nigeria Payments System Vision 2028.

She also cited the Nigerian Overnight Financing Rate, developed in collaboration with the Financial Markets Dealers Association, as a market-based benchmark for short-term funding transactions.

According to her, the benchmark is expected to enhance transparency in the money market and align Nigeria’s financial infrastructure with international standards.

On financial inclusion, Sidi-Ali said the CBN would continue collaborating with financial institutions, fintech companies, mobile money operators, development partners and state governments to extend financial services to underserved communities.

She stressed that expanding access to financial services was essential to supporting entrepreneurship, reducing poverty and creating economic opportunities.

Speaking on the importance of the CBN Listens Programme, Sidi-Ali said sustained engagement with stakeholders would help the bank address misconceptions about its policies and identify emerging challenges affecting businesses and households.

She added that feedback from stakeholders would help shape future engagements and improve the effectiveness of the bank’s policy interventions.