CBN mandates minimum 65% loan deposit ratio

CBN mandates minimum 65% loan deposit ratio

The Central Bank of Nigeria (CBN), says it has retained the minimum 65 per cent of Loan Deposit Ratio (LDR) in the interim.

The CBN made this known in a circular signed by its Director of Banking Supervision; Mr Ahmad Abdullahi in Abuja on Wednesday, January 8.

The bank explained that it had noticed a remarkable increase in the size of gross credit; by the Deposit Money Banks (DMBs) to customers.

The CBN enjoined all DMBs 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 per cent; in respect of lending to Small and Medium Enterprises (SMEs), retail, mortgage as well as consumer lending shall continue to apply.

“While failure to achieve the target shall continue to attract a levy of additional cash reserve requirement of 50 per cent 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,” it said.

The apex bank said it would continue to monitor compliance; review market development and make further alterations in the LDR as it deems appropriate.

Meanwhile, the CBN has released the Nigerian Payment Systems Risk and Information Security Management Framework; to guide the management of risks associated with payment systems in the country.

The CBN released the guidelines on its website on Monday, January 6; and said one of the objectives of the framework was to identify and address sources of systemic risks; within the Nigerian Payment System landscape.

According to CBN, the framework will help to establish clear and also appropriate rules and procedures; to carry out the risk-management objectives.

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Equally important, it stated that it would also facilitate to employ the resources necessary to achieve the payments system’s risk management objectives; and also integrate risk management into the decision making processes of the Scheme Boards and Working Groups under PSV 2020.

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Mayowa Oladeji

A writer with a keen interest in human stories and topical issues around the world.

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