Operators in the banking sector have since been concerned over the imposition of 75% Cash Reserve Requirement (CRR) on public sector deposits. Reports have specified that banks will face a more hard line regulation this year. The latest monetary tightening measure brought forward the sting banks were to face in 2014.
Increasing the CRR reduces the appeal of public sector deposits to commercial banks, which can now deploy only a quarter of that money, before paying the administrative costs related with managing it.
By raising the CRR on public sector deposits, the CBN aims to slow growth in money supply and thereby reduce inflationary pressures to sustain a comfortable level of inflation around high single digits.