NIGERIA’S official loan-to-deposit Ratio for banks will remain at 65 per cent.
Central Bank of Nigeria (CBN) handed down the directive in a latest circular issued to Deposit Banks yesterday.
This, CBN explains, will encourage Deposit Money Banks (DMBs) to maintain strong risk management practices regarding their lending operations.
According to the circular which is dated January 7, 2020 and signed by signed by CBN Director of Banking Supervision, Ahmad Abdullahi, banks may violate the policy at their own peril.
The circular further adds that average daily figures would be applied to assess compliance going forward as an incentive to assign a weight of 150 per cent in respect of lending to Small and Medium Enterprises, retail, mortgage and consumer lending which will continue to apply.
“The CBN has noticed remarkable increase in the size of gross credit by the DMBs to customers. Accordingly, the CBN has decided to retain the minimum 65 per cent LDR in the interim. All DMBs are required to maintain this level and are further advised that average daily figures shall be applied to assess compliance going forward.
