By Etuka Sunday
The Central Bank of Nigeria (CBN) yesterday directed Deposit Money Banks (DMBs) to maintain the minimum 65% Loan Deposit Ratio (LDR) to Small and Medium Enterprises (SMEs) in the country.
CBN said, the directive was part of its regulatory measures to improve lending to the real sector of Nigerian economy.
In a circular signed by the Director, Banking Supervision, CBN, Ahmad Abdullahi, the apex bank said, it noticed a “remarkable increase in the size of gross credit by the Deposit Money Banks (DMBs) to customers.
“Accordingly, the CBN has decided to retain the minimum 65% Loan Deposit Ratio (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 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.
“DMBs are further encouraged to maintain strong risk manegement practices regarding their lending operations.
“The CBN shall continue to monitor compliance, review market devetopments and make further alterations in the LDR as it deems appropriate,” the circular said.
