News Column

Credit to Private Sector Hits N16.964 Trillion in June

July 23, 2014

Obinna Chima

Banking sector credit to the private sector increased year-on-year by N195 billion N16.964 trillion at the end of June 2014, compared to the N16.769 trillion it was at the end of May 2014.

The Central Bank of Nigeria (CBN) revealed this in its latest money and credit statistics for June 2014.

The data showed that broad money (M2), which generally is made up of demand deposits at commercial banks and monies held in easily accessible accounts also climbed slightly year-on-year to N15.928 trillion as at June, from the N15.907 trillion recorded in May.

However, Narrow Money (M1), which includes all physical monies such as coins and currency along with demand deposits and other assets held by the central bank declined year-on-year to N6.587 trillion in the month under review, as against the N6.742 trillion it was the previous month.

Also, just as currency outside banks fell to N1.162 trillion in June, from N1.205 trillion the previous month, the total amount of currency-in-circulation also dropped from N1.518 trillion at the end of May, to N1.497 trillion in the month under review.

Furthermore, the data showed that the total amount of Deposit Money Banks' (DMBs') reserves with the central bank declined from N3.582 trillion the previous month, to N3.226 trillion in June. Bank reserves are deposits in accounts with the central bank that are not to be lent out.

According to the figures, Reserve Money (Base Money) also dropped to N4.723 trillion, from N5.100 trillion.

Also, demand deposits which are funds held in an account from which deposited funds can be withdrawn at any time without any advance notice to the depository institution also reduced marginally from N5.536 trillion in May to N5.424 trillion in June.

However, quasi money, which is made up of highly liquid assets that can easily be converted to cash increased to N9.341 trillion in June, from N9.166 trillion the previous month, while Net Foreign Assets maintained its previous month's value of N7.693 trillion. Net Domestic Assets also stood at N8.235 trillion.

CBN Governor, Mr. Godwin Emefiele had said the central bank would pursue policies targeted at making Nigeria's treasury bill rates more comparable with other emerging markets and pursue a reduction in both deposit and lending rates in order to enhance access to finance and reduce the cost of funds.

According to him, while a reduction in deposit rates would encourage investment attitudes in savers, a reduction in lending rates would make credit cheaper for potential investors.

He had said the CBN would in the meantime continue to maintain a monetary policy stance to reflect the liquidity conditions in the economy as well as the potential fiscal expansion in the run-up to the 2015 general election.

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Source: AllAfrica

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