Nigeria: CBN threatens to withhold CRR funds if banks don't step up SME lending
It said the banking industry must change to better support the SME sector.The Central Bank of Nigeria (CBN) said it may withhold Cash Reserve Ratio funds that are due to banks if they don't step up lending to small and medium-sized enterprises (SMEs).
CBN governor Godwin Emefiele made the comments after most banks in the country refused to increase lending to small businesses after the CBN lowered the Cash Reserve Ratio from 25 per cent to 20 per cent in November.
"I am saying that if you refuse to support SMEs, we will take the money that we would have released through the CRR and lend it through any channel that will give young graduates jobs," he told banks at the Annual Bankers' Committee Retreat in Lagos.
"We all need to rethink this together because there is no need to release the money if all you do with it is buying Treasury bills," he added, quoted by the Premium Times.
Mr Emefiele said banks are not playing an "active role" when it comes to financing SMEs, adding that the country is entering a phase where smaller businesses must be given priority in the nation's growth.
He added that the banking industry must change and come up with new ways to support small companies.
According to figures from the Ministry of Finance, SMEs contribute up to 50 per cent to GDP.