The Central Bank of Nigeria (CBN), has announced a scale down of the Loans to Deposits Rate (LDR) by 15.0ppts to 50.0% – reversing previous threshold set by the past CBN administration in January 2020.
This is according to the apex bank’s circular to Deposit Money Banks titled “Re: Regulatory Measures to Improve Lending to the Real Sector of the Nigerian Economy”.
The CBN explained that the downward review of LDR allows banks comply with the 45.0% CRR directive, and eases off pressure on the lenders considering the restrictive nature of other CBN directives including the Net Open Position (NOP) ceiling of 20.0% short and 0.0% long.
“Thus, we believe this policy would enhance ability of banks to sweat out assets without creating unnecessary risks,” the circular added.