The Central Bank of Nigeria (CBN) has issued a new directive to all Deposit Money Banks (DMBs) introducing a reduction in the loan-to-deposit ratio (LDR) to 50%.
The adjustment, which is effective immediately, marks a 15%-point decrease from the previous rate.
This was contained in a circular signed by the acting Director of the Banking Supervision, Adetona Adedeji, titled ‘RE: Regulatory Measures to Improve Lending to the Real Sector of the Nigerian Economy.’
The latest circular is sequel to an earlier one issued on January 20, 2020.
The CBN stated that following a shift in its policy stance towards a more contractionary approach, it was imperative to review the loan-to-deposit ratio (LDR) policy to align with the current monetary tightening by the CBN.
It explained that the reduction of the LDR by15 percentage points to 50%, was to bring it in a similar proportion to the increase in the CRR rate for banks, and urges Aall DMBs to maintain this level, adding that average daily figures shall continue to be applied to assess compliance.
