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The Central Bank of Nigeria has retained the Loan to Deposit Ratio for the banking sector at 65 per cent.
The apex bank said this in a circular issued to Deposit Banks dated January 7,2020.
The circular was signed by the Director, Banking Supervision Department, CBN, Mr Ahmad Abdullahi.
The apex bank bank in the circular released on Wednesday warned DMBs against violating the LDR, adding that average daily figures would be applied to assess compliance going forward.
It said the incentives which assign a weight of 150 per cent in respect of lending to Small and Medium Enterprises, retail, mortgage and consumer lending will continue to apply.
It warned that failure to achieve this target would continue to attract a levy of additional cash reserves requirements of 50 per cent of the lending shortfall of the target LDR on or before March 31, 2020.
It reads in part, “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.
“The incentives which assigns a weight of 150 per cent 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 reserves requirement of 50 per cent of the lending shortfall of the target LDR on or before March 31,2020.”
The CBN encouraged DMBs to maintain strong risk management practices regarding their lending operations.
