CBN Refunds Banks Part of $1.4B Penalty Over Credit Target

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By Emele Onu

Nigerian central bank has refunded lenders part of the 500 billion naira ($1.4 billion) taken as additional cash reserves after banks failed to meet a target to provide more credit.

Citigroup Inc. and Zenith Bank Plc were among a dozen lenders fined last month for not reaching the set goal.

“Most of them that were involved got a refund,” after they met the requirement at the end of September, Ahmad Abdullahi, the head of banking supervision said by telephone, without naming the beneficiary banks or how much was returned.

Nigeria’s central bank debited lenders a combined 500 billion naira on Sept. 26 for falling short of 60% loan-to-deposit target introduced in July. The measures aimed to boost credit to small and medium sized businesses as well as consumers and help revive the economy. The central bank agreed to refund banks that meet the deadline, according to Zenith Bank CEO Ebenezer Onyeagwu.

“It is not a penalty where a bank is to forfeit money,” Abdullahi said. The regulator raised the ratio this month to 65% for a December deadline and said the directive would be reviewed quarterly.

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Godwin Okafor is a Financial Journalist, Internet Social Entrepreneur and Founder of Naija247news Media Limited. He has over 16 years experience in financial journalism. His experience cuts across traditional and digital media. He started his journalism career at Business Day, Nigeria and founded Naija247news Media in 2010. Godwin holds a Bachelors degree in Industrial Relations and Personnel Management from the Lagos State University, Ojo, Lagos. He is an alumni of Lagos Business School and a Fellow of the University of Pennsylvania (Wharton Seminar for Business Journalists). Over the years, he has won a number of journalism awards. Godwin is the chairman of Emmerich Resources Limited, the publisher of Naija247news.

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