The Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) on Monday said it has retained all the monetary policy parameters unchanged.
The CBN governor, Godwin Emefiele, said during an online briefing at the end of the committee’s meeting in Abuja.
He said the monetary policy rate (MPR), popularly called lending rate, was left unchanged at 12.5 per cent.
The other parameters that were retained include the cash reserve requirement (CRR) at 27.5 per cent, Liquidity Ratio at 30 per cent and the Asymmetric Corridor at +200/-500 basis points around the MPR.
The CRR is the funds kept with the CBN as a minimum deposit a commercial bank must hold as reserves, which they cannot lend out to customers.
During its previous meeting in May, the committee decided to slash the lending rate from 13.5 per cent to 12.5 per cent to stimulate credit expansion to critical sectors of the economy, stimulate employment and revive economic activity for quick growth recovery from the impact of coronavirus.
Following the outbreak of the coronavirus pandemic, the CBN unveiled various stimulus packages, such as concessionary rates, loan restructuring, and targeted loans to agriculture, manufacturing and health sectors to spur economic recovery in the country.
At the briefing on Monday, the CBN governor said the MPC decided to retain all the monetary policy rates to allow the various intervention programmes time to take effect.
Reviewing the performance of the economy based on the impact of the CBN intervention programmes, Mr Emefiele said the country’s banking system remains very strong and resilient.
He attributed the strength of the banking system to a highly regulated regime by the apex bank, which he said was committed to ensuring all the banks abide by the various prudential regulations established to guide their operations.
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The CBN governor said non-performing loans (NPLs) ratio of the banking industry dropped from about 11.1 per cent as of May 2019 to 6.41 per cent as of June 2020, while the Capital Adequacy ratio (CAR) declined from 15.6 per cent to 15 per cent within the same period. Liquidity ratio, which was 48 per cent as at August 2019, has dropped to 37 per cent by June.
Between June 2019 and June 2020, Mr Emefiele said gross loans and advances by banks to various sectors of the economy as a result of CBN’s Loan-to-Deposit rate (LDR) policy increased by N3.33trillion, from N15.6trillion to N18.9trillion.
He listed some of the priority sectors granted N10.3billion by the CBN to include manufacturing sector (N815billion); retail and consumer loans sector (N615billion); agriculture, forestry and fisheries sector (N255billion); Information technology and communications sector (N208billion), and others N251billion.
“The size of the large sums granted to the different sectors of the economy by the banks is an indication that the Nigerian economy is still very strong and resilient and able to support the country’s economic development,” the CBN governor said.
At the onset of COVID-19, he said the CBN introduced a number intervention programmes valued at over N100billion to support households and SMEs impacted by the pandemic, and N1trillion to support the agriculture and manufacturing sectors to remain in business.
Today, he said over N152billion out of N152.9billion has been disbursed to 61 manufacturing companies out of the N1trillion, while other health-care projects have been funded with N26.27billion out of N100billion; 11,618 beneficiaries agricultural loans scheme have been funded with over N41 billion.
Another N59.195billion disbursed to various MSMEs impacted by the COVID-19.
On why the CBN asked the banks to grant forbearance on loans to their customers, Mr Emefiele said it was to avoid the loans going bad as a result of the impact of the coronavirus pandemic, which negatively affected the global economy and made it difficult for businesses to meet their loans obligations.
Forbearance is the policy of granting customers additional time to restructure the period they have to service or repay their loans.
The CBN governor said despite the impact of the COVID-19 on the global economy, he was not aware of any report of any business in Nigeria going under as a result of the pandemic.
So far, he said 22 of the 27 banks in the country have submitted requests to the CBN for permission to restructure loans granted to about 35,640 of their customers involving about N7.8trillion, which is about 41 per cent of the total industry loans portfolio.
Currency adjustment programme began two weeks ago to attempt to bring the exchange rate of the Naira to equilibrium with the exchange rate to the dollar. He said Nigeria is yet to touch the $3.4 billion loan it took from the IMF.