Regulatory Alerts2011-08-26
Banking Circular No 9 of 2011 - Guidelines on the Management of Liquidity through the CBK Discount Window and Cash Reserve Ratio
Banking Circular No. 9 of 2011 addresses the management of liquidity through CBK's discount window and cash reserve ratio (CRR) in commercial banks, following the previous circular No. 8 of 2011. The key changes include varying the weight given to the differential between the interbank rate and the Central Bank Rate (CBR), which will now vary from zero to one depending on specific liquidity conditions in the interbank market. Additionally, commercial banks are now required to maintain their CRR based on a monthly average basis, allowing them to deviate daily as long as the overall average for the month remains above 4.75%. Banks failing to observe this requirement will face penalties by the Central Bank at the current penalty rate. These changes take effect from Monday, August 29th, 2011.