How The CBN LDR Will Shape Nigeria's Economy- Dr. Adesola Adeduntan


Friday, September 13, 2019   / 07.30PM / Nifemi Taiyese for Proshare WebTV / Header Image Credit:  WebTV

At a recent press briefing for the 12th Annual Banking and Finance Conference scheduled for Abuja on September 24-25th, 2019, the Chairman of the Planning Committee and MD/CEO of First Bank of Nigeria, Dr Adesola Adeduntan, lauded the Central Bank of Nigeria (CBN) for its Loan-To-Deposit Ratio (LDR) policy. 

According to Dr Adesola it will increase lending activities of banks to the real sector of the economy. 

He acknowledged the fact that the Nigerian economy cannot grow without deposit money banks (DMBs) lending to the real sector of the economy, which is the sum of the efforts by the CBN to mobilize additional lending. 

Adeduntan noted that credit was critical to the growth of the economy and the CBN LDR policy was timely and appropriate, he expressed the belief that it will have multiplier effect on the economic activities in the nation. 

Looking at the country's current GDP growth rate of 1.94%, the Bank boss said it was still behind the annual population growth rate of  about 2.6% , and required bold reforms to unlock economic opportunities. 

He  stated that the five-year agenda of the current CBN Governor will go a long way in supporting economic growth, even as he expects fiscal and monetary policy alignment.

Beyond the CBN directive on the Loan-to-Deposit Ratio of 60% for Deposit Money Banks,  he noted that banks must continue their lending in a safe and effective manner. 

He  also added that the Central Bank is to embark on steps to ensure that there is a significant shift in the credit culture of Nigerians.

Adeduntan called on all key players in the Nigerian financial system, to play their part and ensure that Nigeria's quest for robust economic growth is attained. 

On July 03, 2019 the CBN, in a bid to improve lending to the real sector of the economy, mandated all DMBs to maintain a Loan to Deposit Ratio (LDR) of 60% by September 30, 2019. 

The CBN further stated that failure to meet the regulatory requirement by the stated date would result in a charge of an additional Cash Reserve Requirement (CRR) equal to 50% of the lending shortfall of the target LDR. 

This means that all the Deposit Money Banks in Nigeria have less than two weeks, to comply with the LDR provision. 


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