By Michael Eboh 

The Central Bank of Nigeria, CBN, yesterday, retained the 65 per cent Loan to Deposit Ratio, LDR, for commercial banks in Nigeria.

In a circular dated January 7, 2020, signed by Director of Banking Supervision, Mr Ahmad Abdullahi, CBN said it decided to retain LDR at 65 per cent because it observed a significant improvement in credit to the real sector.

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It said: “CBN has noticed a remarkable increase in the size of gross credit by the Deposit Money Banks (DMB) to customers. Accordingly, CBN has decided to retain the minimum 65% Loan Deposit Ratio (LDR) in the interim.

“All DMBs are required to maintain that level and are further advised that average daily figures shall be applied to assess compliance going forward.

“The incentive which assigns a weight of 150 per cent in respect of lending to SMEs, retail mortgage and consumer lending shall continue to apply while failure to achieve the target shall continue to attract a levy of additional Cash Reserve Requirement at 50 per cent of the lending shortfall of the target LDR on or before March 31st 2020.”

The apex bank, however, advised the banks to maintain strong risk management practices regarding their lending operations, adding that it would continue to monitor compliance, review market developments and make further alterations in LDR as it deems appropriate.

Vanguard