The Central Bank of Nigeria (CBN) has direct commercial banks to have a minimum loan to deposit ratio (LDR) of 60 per cent by September 30, 2019.
This, according to CBN is to allow commercial banks to drive the current administration economy growth through lending to real sectors and the ratio us subject to quarterly review.
The circular signed by director of banking supervision, Mr. Ahmad Abdullahi on Thursday stated that the move is to encourage SMEs, Retail, Mortgage and Consumer Lending, these sectors shall be assigned a weight of 150per cent in computing the LDR for this purpose.
According to him, “The CBN shall provide a framework for classification of enterprises/businesses that fall under these categories”.
He warned that, “Failure to meet the above minimum LDR by the specified date shall result in a levy of additional Cash Reserve Requirement equal to 50per cent of the lending shortfall of the target LDR.
“The CBN shall continue to review development in the market with a view to facilitating greater investment in the real sector of the Nigerian economy.”