The Central Bank of Nigeria (CBN) has issued a circular mandating commercial banks operating in the country to lend out up to 60% of their customer deposits.
The Governor of the apex bank, Godwin Emefiele, had informed attendees at the 2019 Africa Investors’ Conference (AIC) which took place in London between June 25 and 27 of his plan to issue this regulation. This is according to a report published by Nairametrics.
The Central Bank ordered all banks to maintain a minimum loan to deposit ratio of 60% by September 2019. The ratio will be reviewed quarterly.
To determine the 60% ratio, the CBN will assign SME, Mortgage, Retail and Consumer lending a combined weighting of 150%.
The CBN also said that banks that fail to meet this requirement would risk seeing their cash reserve ratios increase to 50%. This means 50% of a bank’s deposit will be immediately sent to the CBN.
According to the data released in March by the Nigerian Bureau of Statistics (NBS), Nigerian banks currently have non-performing loans of about N1.69 trillion (N2.19 trillion as at April 2018). The data also revealed that commercial banks had a total deposit of about N27 trillion out of which about N15 trillion or 55.5% was money lent to the private sector.