The Central Bank of Nigeria has issued a letter to all banks stating regulatory measures to improve lending to the real sector of the Nigerian economy.
In A letter dated January 7, 2020, the CBN through the Director of Banking Supervision – Ahmad Abdullahi – stated its decision to retain the minimum 65% Loan Deposit Ratio (LDR) in the interim. Consequently, all Deposit Money Banks (DMBs) are required to maintain that level.
“The incentive which assigns a weight of 150% in respect of lending to SMEs, Retail, Mortgage and 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% of the lending shortfall of the target LDR on or before March 31, 2020”, the letter read. The parent bank further urged DMBs to maintain strong risk management practices regarding their lending operations and assured it shall continue to monitor compliance, review market developments and make further alterations in the LDR as it deemed appropriate.