BEVERLY HILLS, January 08, (THEWILL) – The Central Bank of Nigeria (CBN) Wednesday declared it would retain the 65% minimum Loan to Deposit Ratio (LDR) in the interim, expressing satisfaction that the policy has helped ramp-up leading by the commercial lenders to the economy.
“The CBN has noticed remarkable increase in the size of grow credit by the Deposit Money Banks (DMBs) to customers.
“Accordingly, the CBN decided to retain the minimum 65% Loan to Deposit (LDR) in the interim,” the CBN stated in a circular to all banks signed by its Director, Banking Supervision, Ahmad Abdullahi.
“All DMBs are required to maintain this level and are further advised that average daily figures shall be applied to assess compliance going forward.”
The CBN further explained that the incentive which assigns a weight of 150% in respect of lending to Small and Medium scale Enterprises (SMEs) Retail Mortgage and Consumer Lending would continue to apply while failure to achieve the target would still attract a levy of additional Cash Reserve Requirement of 50% of the lending shortfall of the target LDR on or before March 31, 2020.
The apex bank encouraged the commercial lenders to maintain strong management practices in their lending g operations, waring that it would continue to monitor compliance, review market developments and make further alterations in the LDR whenever appropriate.
The CBN had in July 2018, asked banks to lend a minimum of 60 percent of their customers’ deposits, and later raised that to 65 %, a policy which attracts a levy of additional Cash Reserve Requirement equal to 50 percent of the lending shortfall of the target LDR on failure to adhere.
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