The Central Bank of Nigeria (CBN) has reviewed the loan to deposit ratio (LDR) for banks upwards to 65 per cent from 60 per cent. In a circular addressed to banks titled ‘Regulatory measures to improve lending to the real sector of the Nigerian economy’, the apex bank set a December deadline to meet the new LDR.
The CBN said the newly revised LDR is informed by the noticeable growth in the level of the industry gross credit. “The Central Bank of Nigeria (CBN) has noted the appreciable growth in the level of the industry gross credit, which increased by N829.40 billion or 5.33 per cent from N15,567.66 billion at end of May 2019 to N16,397.06 billion as of September 26, 2019, following its pronouncements on the above initiative,” the memo read.
“In order to sustain the momentum and in line with the provisions of our earlier letter, the minimum Loan to Deposit Ratio (LDR) target for all Deposit Money Banks (DMBs) is hereby reviewed upwards from 60 per cent to 65. “Consequently, all DMBs are required to attain a minimum LDR of 65 per cent by December 31, 2019, and this ratio shall be subject to quarterly review.