The Central Bank of  Nigeria (CBN) is set to increase the Loan/Deposit Ratio of banks to 70% in 2020.

This was disclosed by the Deputy Director, Financial Policy & Regulation Department, CBN, Hassan Mahmoud  at the 2019 Workshop for Finance Correspondents and Business Editors organised by the Nigeria Deposit Insurance Corporation, (NDIC) in Yola, Adamawa State.

He said: “The CBN increased the minimum loan-to-deposit ratio to encourage banks to lend and de-risk the real sector, particularly the SMEs. This is to encourage employment. Now, we are thinking of doing 70 per cent by the end of next year. Within the period that we have increased the LDR, industry lending has increased by over N1.1 trillion.”

“What we also did in the system to strengthen banking system stability, is the fact that so long as you are owing a bank, let us say you have N1 billion in one bank and you went to another bank to borrow N1.5 billion and you leave that to go to another bank to borrow another N1 billion, without paying the loans you collected, the new policy is that as long as you default, where you have money in any bank, the bank you are owing can take the money in any of your account that you have money. You would have been made to sign the agreement before taking the loan. That is one of the measures to guard against risk in the system,” he added.