CBN retains banks’ deposits ratio at 65 Percent

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The Central Bank of Nigeria (CBN) has retained banks’ deposit ratio at 65 percent citing rising real sector loans by banks as the reason. CBN announced this in a circular signed by Ahmad Abdullahi, the Director of Banking Supervision, to all banks dated 7th January 2020 titled: ‘’Re: Regulator Measures to Improve Lending to the Real Sector of the Nigerian economy.”

The CBN in October 2019 had raised the Loan to Deposit Ratio (LDR) of banks from 60 to 65 percent to raise real sector lending. The CBN, in the directive, gave December 31, 2019 deadline for compliance.

However, at the expiration of that deadline, the CBN held the rates constant and promised further reward banks who improved lending to MSMEs. The circular read: “The Central Bank of Nigeria’s (CBN) regulator directives contained in its circulars dated July 3, 2019, ref. BSD/DIR/GEN/MDD/O1/)45 and September 30, 2019 ref. BSD/DIR/GEN/LAB/12/049 refers.

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