Nigerian lenders suffered another debit from the regulator last week as a consequence of not meeting up with the regulatory 65% Loan to Deposit Ratio (LDR) set by the Central Bank of Nigeria (CBN).
Loan to Deposit Ratio is a ratio, representing the percentage of a bank’s total deposit that is made available for borrowers in terms of the loan.
The CBN had in June 2019, announced a new policy measure, which requires Deposit Money Banks (DMBs) in the country to maintain a minimum of 60 percent Loan to Deposit Ratio (LDR). The LDR was subsequently raised to 65% and December 2019 was set as the new deadline.
The consequence of not meeting up with the policy according to the CBN is that banks will have to increase their Cash Reserve Ratio (CRR) by 50% of the unused deposit.
CRR is the ratio of the total bank deposit kept with the CBN as a reserve at zero interest. And it is currently at 27.5%
The intent of the new policy according to the Apex Bank is to boost the credit availability to the real sector of the economy thereby increasing job creation and economic growth.
The new debit saw big banks like Zenith Bank Plc, UBA, Access Plc, FBN, and GTBank, leading in the figures with a total deduction of N290bn, N160b, N140bn, N95bn, and N55bn respectively.
Other lenders affected in the deduction include Polaris (N30bn), Keystone (N30bn), Standard Chartered Bank (N24bn), Fidelity (N15bn), FCMB (N11bn), Ecobank (N11bn), Stanbic (N10bn), WEMA (N10bn), Coronation (N3.9bn), Sterling (N8bn), Citi (N6bn), Union (N5bn), Providus (N5bn), RMB (N5bn), FSDH (N1.5bn), NOVA (N1bn) Globus (N3bn), Unity (N7bn), Suntrust (Nil), Heritage (Nil), Titans (Nil), and FBN Quest (Nil).