The Central Bank of Nigeria (CBN) says the minimum loan to deposit ratio for commercial banks would remain at 65% in the interim.
In a statement signed by Ahmad Abdullahi, its director of banking supervision, the apex bank said it is has noticed a remarkable increase in the size of credit to customers since the policy was introduced.
The CBN enjoined all deposit money banks to maintain this level as well as ensure that average daily figures were applied to assess compliance.
“The incentive which assigns a weight of 150% in respect of lending to small and medium enterprises (SMEs), retail, mortgage as well as consumer lending shall continue to apply,” the statement read.
“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 management practices regarding their lending operations.”
Cash reserve ratio is the share of customers deposit that is kept with the central bank.
The apex bank said it would continue to monitor compliance, review market development and make further alterations in the LDR as it deems appropriate.
The CBN first increased the LDR to 60% in July 2019 as part of its efforts to increase lending to the real sector; which it says would spur economic growth. (The Cable).
