Central Bank of Nigeria (CBN) has reviewed the loan-to-deposit ratio (LDR) policy to align with its current monetary tightening, reducing the LDR by 15 percentage points to 50 percent.
The apex bank disclosed this in a circular titled: ‘Re: Regulatory Measures to Improve Lending to the Sector of the Nigerian Economy’, signed by Adetona Adedeji, the acting director of the banking supervision department.
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According to the bank, the decision followed a shift in its policy stance towards a more contractionary approach.
With this reduction, all deposit money banks are restricted in their ability to offer credits/ loans to businesses and individuals.
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The circular read, “Following a shift in the Bank’s policy stance towards a more contractionary approach, it is imperative to review the loan-to-deposit ratio (LDR) policy to align with the current monetary tightening by the CBN.
“Accordingly, the CBN has decided to reduce the LDR by 15 percentage points to 50 per cent, in a similar proportion to the increase in the CRR rate for banks.
“All DMBs are required to maintain this level and are further advised that average daily figures shall continue to be applied to assess compliance.”
