April 18, 2024/CBN

Culled: Proshare

The Central Bank of Nigeria (CBN) has announced a review of the loan-to-deposit ratio (LDR) following a policy shift. CBN reduced the Loan-to-Deposit Ratio (LDR) by 15% to 50%. This is a new approach,  as the CBN had earlier increased banks’ Cash Reserve Ratio (CRR) rate in January 2020. 

In a letter to all Deposit Money Banks (DMBs) signed by Dr Adetona Adedeji, Ag Director, Banking Supervision Department, Central Bank of Nigeria, the regulator advised the DMBs to maintain the current level of LDR. The CBN also stated that average daily figures will continue to be used to assess compliance.

The statement read, ” While DMBs are encouraged to maintain strong risk management practices regarding their lending operations, the CBN shall continue to monitor compliance, review market developments, and make alterations in the LDR as it seems appropriate.”

The CBN said it would continue to review market developments and make necessary adjustments to the LDR to ensure compliance.