Business Hilights
Tracking Nigeria's Headline Business News Online

Banks’ that may be trapped by CBN’s 60% Loan-to-Deposit Ratio in time race

A number of commercial banks’ that hitherto shy away from supporting SMEs and loan access are now pursuing depositors with all manner of loan packages so as to beat the of growing loans by N800bn following CBN’s directive.

Fact checks across some banks (names with held) showed that whereas several Deposit Money Banks (DMBs) in the country have grown the loan book by N800 billion in an aggressive drive to comply with the 60 per cent Loan-to-Deposit Ratio (LDR) mandate given by the apex bank, a few banks have been fingered by experts as not being able to meet the deadline after all.

Analysts say part of the reasons for not meeting up the deadline include conditions attached to the loans which discourage customers’ interests.

Only few weeks ago, in a bid to boost economic growth, the CBN mandated DMBs to give out a minimum of 60 per cent of their deposits as loans with effect from September, 2019.

The apex bank, in a letter to all banks titled: “Regulatory Measures to Improve Lending to Economy”, signed by its Director (Banking Supervision), Ahmad Abdullahi, stated that, “In order to ramp up growth in the Nigerian economy through investment in the real sector, CBN has approved the following measures: All DMBs are hereby required   to maintain a minimum Loan to Deposit Ratio (LDR) of 60 per cent by September 30, 2019. This ratio shall be subject to quarterly review.’’

The Monetary Policy Committee (MPC), after its meeting last week noted the growth in the size of industry loans from N15.4tn in June to N16.23tn in September, 2019 is likely to be sustained going by loan spree by banks to small business operators.