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CBN to hold MPC meeting next week

The CBN’s highest monetary policy decision-making body, the MPC is set to hold its meeting.

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CBN to hold MPC meeting next week, Demand for credit by household increases in Q2 2020 - CBN, CBN grants licenses to 3 Payment Service Banks, Mobile money loan CBN Governor, CBN, Three PSBs get Apex Bank’s provisional to commence operations, Milk Import: Experts advise CBN on FX restriction , CBN automates trading system, introduces electronic form to facilitate exports , CBN campaigns for Made-in-Nigeria products 

The Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) is set to convene next week for its periodic meeting.

The notice of the meeting, which was released by the apex bank on its website, stated that the 275th meeting of the MPC is scheduled to hold on next Monday, September 21 and Tuesday, September 22, 2020, at CBN Headquarters, Abuja.

READ: UBA Plc H1’2020 results, a true reflection of its rightsizing decision?

The MPC meeting: Basically, the MPC is the CBN’s highest monetary policy decision-making body. It comprises the governor of the Bank who is the chairman, the four deputy governors of the Bank, two members of the board of directors of the Bank, three members appointed by the president, and two members appointed by the governor.

The MPC sets monetary policies for banks in the country through decisions on the Monetary Policy Rate (MPR), Cash Reserve Ratio (CRR) and Liquidity ratio. These variables determine the quantum of funds that the banks have at their disposal to lend.

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The MPR is the rate at which the CBN lends to banks. This, in turn, determines the interest rate that banks charge members of the public.

READ: President Buhari approves N13.3 billion for Community Policing in Nigeria

Decisions at the last meeting

The Central Bank’s MPC meeting was last held in August 2020, where all key rates were left unchanged. Basically, the MPR was kept at 12.5%, while other parameters such as Cash Reserve Ratio (CRR) at 27.5%, Liquidity ratio at 30%, and asymmetric corridor remained unchanged.

Emefiele explained that eight members of the committee voted in favour of holding the MPR, while two members wanted it reduced.

READ: CBN debits banks another N459.7 billion for failure to meet CRR target

According to the MPC, the decision to hold all rates constant was largely driven by the effect of the outbreak of COVID-19 that has largely disrupted the global economy.

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Financial Services

AfDB assures firms of supporting their expansion plans

AfDB is dedicated to prepare homegrown institutional investment funds.

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Adesina Probe: US Treasury Secretary praises AFDB’s decision on independent review, Growth must be seen in citizens' lives, AFDB President to African leaders, AFDB launches $3 billion “Fight COVID-19” social bond, Adesina Probe: US Treasury Secretary praises AFDB’s decision on independent review

Africa Development Bank (AfDB) has reassured firms of its dedication to their expansion plans and fortification of their capital base through its homegrown institutional investment funds.

While announcing the bank’s endorsement of a $10 million unsecured facility given to InfraCredit, a Nigerian firm, Stefan Nalletamby, AfDB’s Director of Financial Sector Development, explained that the financial institution is dedicated to prepare homegrown institutional investment funds and invigorate non-sovereign local debt capital market advancement in Nigeria.

READ: CBN releases new capital base, sanctions for Microfinance Banks in new draft guidelines

He said, “The Bank’s help will fortify the capital base of InfraCredit, supporting the expansion of the Company’s core business of guaranteeing of bonds securities issued to fund infrastructural projects.

“This at last assists with expanding private sector financing for critical infrastructure such as; energy, agribusiness, water, health and education, through local capital markets.”

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Chief Executive Officer of InfraCredit, Chinua Azubike, said, ‘’Despite the impact of COVID-19, and changes to macro-economic assumptions, we are pleased to have reached yet another milestone in our pursuit to strengthen our robust balance sheet and guarantee issuing capacity.

READ MORE:AfDB’s debarring of 4 Nigerian companies: Consequences and effects)

“Notwithstanding challenging market conditions, we have continued to demonstrate our strong fundamentals, solid underlying portfolio performance, proven track record and profitability.”

With the admission of AfDB to its capital structure, he explained that his company is confident of its continuing ability to deepen market penetration and support access to long term domestic credit for the growing pipeline of infrastructure projects that will create jobs and support local economic growth.

 

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Financial Services

CBN to increase loans to agricultural sector to 10% of total bank credit

The CBN continues with its support for the agricultural sector.

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CBN to increase loans to agricultural sector to 10% of total bank credit, Agritech, Efficient Power: Addressing a Critical Element in Nigeria’s Agro-Industrial Revolution

The Central Bank of Nigeria (CBN) has revealed that the country needs to increase its level of bank credit to the agricultural sector by over 50% within the next 4 years to boost food production.

The implementation of this is expected to drive the allocation to the sector to 10% of the entire credit in the banking sector from the current 4%.

READ: Fitch says Nigerian banks have a risk indicator of 12.14, explains why

This disclosure was made by the CBN Governor, Godwin Emefiele, on Tuesday, September 15, 2020, at the 13th Annual Banking and Finance Conference, organized by the Chartered Institute of Bankers (CIBN) in Abuja.

Emefiele said that the banking sector should focus on increasing its support for the agricultural sector, as the coronavirus pandemic has caused disruptions on global supply chains and food supply from other countries.

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The CBN boss stated that some of the opportunities in the agricultural sector that banks should explore include addressing some of the existing gaps in the agriculture value chain like storage centres, transport logistics and technology platforms, that can enable rural farmers to sell their produce directly to the markets.

READ: Explained: CBN’s powers to seize bank account of criminals

Emefiele also disclosed to bankers that currently, loans to the food sector accounts for around 4% of the total credit in the banking sector. He said the pandemic had exposed the risk of relying on food and drug imports, as most countries are reluctant to export goods to other countries.

Nairametrics had reported on President Muhammadu Buhari’s directive to CBN not to allocate foreign exchange for food and fertilizer imports. He said the Federal Government would rather empower more local farmers and use agriculture as a means to create more employment among Nigerians.

READ: Consortium of Western investors to inject upwards of $5 billion in Nigeria’s renewable energy sector

Nigeria is reliant on imports, including food items, to meet its needs due to limited manufacturing capacity. It has been struggling to reduce its $20 billion annual food import bill as it finds it difficult to diversify the economy away from oil.

Emefiele told bankers that currently, loans to the food sector accounts for around 4% of the total credit in the banking sector.

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Financial Services

CBN allows banks to pay winnings, salaries for 7 banned betting & gaming companies

The banned betting and gaming companies are now allowed to access their accounts for limited purposes.

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Betting companies makes about N300m per day - Nigerian man reveals

The Central Bank of Nigeria has given some commercial banks instructions to allow betting and gaming companies suspended earlier in the month the approval to honour withdrawals from their accounts to pay for winnings, salaries and other overhead expenses.  

Nairametrics saw a copy of the letter addressed to one of the banks.

READ: CBN sequesters N321.6 billion from banks in new CRR Debits

  • Recall on September 5th the central bank instructed banks to post a no debit on account of 38 companies some of which included betting and gaming companies for violating its foreign exchange regulations, freezing their accounts. 
  • In the prior memo instructing the banks to freeze the accounts the CBN did not mention that it was for forex infractions. However, this memo now confirms that’s what the ban was for.
  • However, banks pleaded with the apex banks to allow the betting and gaming companies to meet urgent operational requirements.

READ: Naira gains at NAFEX window as CBN block accounts of some firms for forex abuse

In one of the memos seen by Nairametrics, the CBN wrote; 

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On Quote:You will recall at the meeting held by the Governor of the Central Bank of Nigeria (CBN) with your bank and stakeholders of seven (7) betting and gaming companies on September 11 2020, you pleaded for clemency processing some transactions in violation of the extant foreign exchange regulations. Similarly, the betting and gaming companies intreated the Governor to allow them discharge operational expenses.” 

The CBN therefore approved that cheque payments and transfers be made out of the accounts provided it was towards winnings, salaries and other overhead expenses. 

READ: Presidency gives reason for forex ban on food and fertilizer imports as MAN reacts

On quote: “Consequently, the Management of CBN has magnanimously granted your bank the approval to honour instruments presented by the companies for payment of winnings, salaries and other overhead expenses.” 

Despite the partial lifting on the ban, the CBN still maintained a “Post No Debit restriction on the account and ordered that “no other transactions should be processed for any of the companies during the period of the waiver” effectively restricting the owners of the companies from accessing to pay capital obligations.  

READ: World Bank puts pressure on Nigeria for more forex reforms to aid recovery

A copy of the letter is attached below; 

 

Download (PDF, 447KB)

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