Uche Usim, Abuja
To further empower Small and Medium Enterprises (SMEs) and other players in the economy, the Central Bank of Nigeria (CBN) has mandated banks in the country to give out 60% of deposits as loans.
The directive was contained in a letter to banks, signed by the Director of Banking Supervision, Ahmad Abdullahi.
According to the apex bank, non-compliant banks would have their cash reserve ratios increased.
Cash reserve ratio is the share of customer’s deposit that is kept with the Central Bank of Nigeria.
The letter further noted that the purpose of the directive was to grow the economy by improving investments in the real sector.
“To encourage lending to small businesses and consumers and more mortgages, these sectors shall be assigned a weight of 150% in computing the LDR,” the letter read.
“Failure to meet the above minimum LDR by the specified date shall result in a levy of additional Cash Reserve Requirement equal to 50% of the lending shortfall of the target LDR.”
The apex bank has been hailed in various quarters as playing a very good role in administering monetary policy policies, especially with regard to its interventions in the agricultural sector and foreign exchange.