CBN Retains Minimum 65% Loan Deposit Ratio in the Interim

January 9, 2020

By Paschal IJEH InvestAdvocate

Lagos (INVESTADVOCATE)-The Central Bank of Nigeria (CBN) on Wednesday announced it has retained the minimum 65 percent of Loan Deposit Ratio (LDR) in the interim, according to a circular signed by Ahmad Abdullahi, its director of Banking Supervision.

Accoirding to the CBN, it had noticed remarkable increase in the size of gross credit by the Deposit Money Banks (DMBs) to customers.

The nation’s apex lender advised all DMBs to maintain this level and that average daily figures shalled be applied to assess compliance going forward.

“The incentive which assigns a weight of 150 per cent in respect of lending to Small and Medium Enterprises (SMEs), retail, mortgage as well as consumer lending shall continue to apply while failure to achieve the target shall continue to attract a levy of additional cash reserve requirement of 50 per cent of the lending shortfall of the target LDR on or before March 31, 2020.

“DMBs are furher encouraged to maintain strong risk management practices regarding their lending operations, ” the circular said.

The CBN affirmed it shall continue to monitor compliance, review market development and make further alterations in the LDR as it deems appropriate.

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