The Central bank of Nigeria (CBN) on Friday imposed on banks another N600 billion Cash Reserve Ratio (CRR) debit in a bid to combat idle cash in the interbank money market.
This comes as excess liquidity in the banking system, which persisted throughout last year, rose further to N1.1 trillion at the close of business on Thursday from N996.9 billion the previous week.
The increase was due to an inflow of N438.7 billion from matured secondary market ( Open Market Operations, OMO) treasury bills during the week.
The apex bank on Friday implemented two Cash Reserve Ratio (CRR) debits of N600 billion in two tranches of N400 billion and N200 billion.
This caused the cost of funds to rise by 800 percent at the close of business on Friday.
Data from FMDQ showed that interest rate on Collateralised (Open Buy Back, OBB) lending rose by 7.5 percentage points to 8.0 percent on Friday from 0.5 percent the previous week.
Similarly, interest rate on Overnight lending, rose by 8.5 percentage points to 9.33 percent on Friday from 0.88 percent the previous week