CBN ties banks down to 60% minimum Loan to Deposit Ratio from Sept
In view of jump-starting massive loan give out to business operators, the Central Bank of Nigeria (CBN), in a circular signed by the Director of Banking Supervision, Ahmad Abdullahi, ruled that “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 circular titled, ‘Regulatory measures to improve lending to the real sector of the Nigerian economy’, according to the apex bank is to “Encourage SMEs, retail, mortgage and consumer lending, these sectors shall be assigned a weight of 150 per cent in computing the LDR for this purpose.
“The CBN shall provide a framework for classification of enterprises/businesses that fall under these categories.
The CBN warned that “Failure to meet the above minimum LDR by the specified date shall result in a levy of additional Cash Reserve Requirement equal to 50 per cent of the lending shortfall of the target of the LDR.”
The apex bank further noted that it would continue to review developments in the market with a view to facilitating greater investment in the real sector of the Nigerian economy by technically forcing banks to give loan facilities.
