The Bankers’ Committee, an umbrella body of managing directors of commercial banks in the country and directors of the Central Bank of Nigeria (CBN), has authorized the use of Cash Reserve Ratio for future lending to the Agricultural and Manufacturing sectors of the economy.
The Committee took this stand at its August meeting in Lagos, approving that the loan should be available at both sectors at one digit interest rate.
Managing Director, Guaranty Trust Bank, Segun Agbaje, in a briefing after the meeting, said that the loans are long term loans where the beneficiaries would be able to take fixed interest rate loans for seven years.
“These are not short term loans; they are long term loans of seven year loans, two year moratorium on principal.” He explained.
The Director further stated that “It would probably be the first time in the history of this country where manufacturers would be able to take fixed interest rate loans for seven years which means they would be able to plan. The volatility that they fear for all kinds of risks would be taken out and I think these are very laudable steps in improving and growing the economy”.
On his part, the Executive Director, Finance, FCMB, Yemisi Edun, said the loans would only be channeled towards the Agricultural and Manufacturing sector for now, adding that it was for the growth and expansion of the sectors as well as creation of jobs in the country.
“This is very positive for the economy and also be positive for banks because we would be able to access these funds and earn on it. And because it would be coming at single digit rate, it would be positive for the economy”. He said.
Cash Reserve Ratio (CRR), is a specified minimum amount of deposit that commercial banks have to hold as reserves with the central bank. It is fixed in line with the stipulated guidelines of the Central bank. As at June 2018, the total CRR of banks in Nigeria was N4.1 trillion.