The Central Bank of Nigeria (CBN) on Thursday issued a circular addressed to all Banks. The circular, contains measures to be adopted by the Apex Bank to ramp up the growth in the Nigerian economy through investment in the real sector.
In the letter signed by Ahmed Abdullah, The Director of Banking Supervision of the CBN. 3 new measures are to be adopted to improve lending to the real sector of the economy. The measures includes:
- All deposit Money Banks (DBN) are to maintain minimum of 60 percent Loan to Deposit Ratio (LDR) by September 30, 2019. the LDR will be subject to review every quarter. LDR is the percentage of Customers’ deposit with Banks, most Banks LDR is currently below 50 percent
- Banks are to adopt 150 percent when computing LDR for some special sectors to encourage lending to them. The sectors includes SMEs, Retail, Mortgage and Consumer Lending. CBN will however release framework for classification of enterprises and businesses that fall under the SME categories.
- And to ensure Banks comply with the directives, any Bank that fails to meet the LDR lending deadline by 30th September 2019 will have its Cash Reserve Ratio (CRR) increased. The CRR increase will be equivalent of 50 percent of the shortfall of the LDR to targeted sectors. CRR is the ratio of the total Banks deposit that is expected to be kept at the CBN as reserve for all banks. CRR on private sector deposit is currently at 20 percent.