CBN’s Real Sector Credit Drive: Yea Or Nay?

Must Read

List of Guaranty Trust Bank Sort Codes & Branches (with addresses) in Nigeria

The sort code is a number that usually identifies both the bank and the branch where an account is...

List of Access Bank Sort Codes & Branches (with addresses) in Nigeria

The sort code is a number which usually identifies both the bank and the branch where an account is...

15 Wool Braid Hairstyles You Should Try

Wool braid hairstyles have been popular for years and show no signs of slowing down. Wool braids allow you...
CBN’s Real Sector Credit Drive: Yea Or Nay?CBN’s Real Sector Credit Drive: Yea Or Nay?

In Jul-19, the Central Bank of Nigeria (CBN), intensified efforts to ramp up real sector credit by imposing a minimum Loan-to-Deposit ratio (LDR) of 60.0% on Deposit Money Banks (DMBs), with a Sept 30th deadline. However, rather than simply penalizing the banks as hinted earlier, the minimum ratio was revised upward to 65.0%, with a new deadline of Dec 31st, 2019. Also, a new weight of 150% was attached to credit extended to the consumer lending, mortgage, and retail sectors.

At first glance, the new deadline was viewed as an extension, but contrary to this, DMBs that failed to meet the initial 60.0% deadline by September 31st were penalized. Accordingly, a total of N499.2bn was debited from 12 banks found wanting, the majority being Tier-1 and International banks. With the pace of policy directives targeted at the banks, there are growing concerns as to what this means for the financial system. First, is the risk of the banks aggressively crashing lending rates to meet up the new limit before the deadline and consequently impairing their asset quality.

Secondly, at 65.0%, the CBN’s next action is unclear, considering that prudential maximum LDR is set at 80%, while regulatory cash reserve (CRR) and liquidity ratios are pegged at 22.5% and 30.0% respectively. Finally, the CBN’s effort to spur real sector credit remains commendable, however, the fragility of the macro-environment calls for caution.

- Advertisement -
CBN’s Real Sector Credit Drive: Yea Or Nay?CBN’s Real Sector Credit Drive: Yea Or Nay?

Subscribe to BrandSpur Ng

Subscribe for latest updates. Signup to best of brands and business news, informed analysis and opinions among others that can propel you, your business or brand to greater heights.

LEAVE A REPLY

Please enter your comment!
Please enter your name here
Read Also:  Suntrust Bank Nigeria Celebrates 3rd Year Anniversary

This site uses Akismet to reduce spam. Learn how your comment data is processed.

CBN’s Real Sector Credit Drive: Yea Or Nay?CBN’s Real Sector Credit Drive: Yea Or Nay?

Latest News

Q1’2020 GDP Growth Slows – Underlying economic weaknesses reflect in GDP performance

The Nigerian economy grew by 1.87% on a year-on-year (YoY) basis in Q1’20. The GDP performance represented a 23...

These Are The 6 Major Areas Of Consumption Affected By COVID-19

As many markets across the globe begin to ease living restrictions and many consumers start to take tentative steps outside their homes, the world...

NSE Set to Host Sustainable Capital Markets Forum to Promote Green Finance in West Africa

The Nigerian Stock Exchange in collaboration with the Milken Institute is set to host the inaugural edition of our Webinar Series on Sustainable Capital...

African Equity Market: On The Path Of Recovery

Despite the COVID-19 pandemic that has engulfed the African continent since Feb-2020 and the associated lockdown measures that were put in place by the...

Delivering On The Y’ello Hope Promise: MTN Foundation Contributes Over 70,000 Items Of Personal Protective Equipment (PPEs) To NCDC

Following MTN’s commitment of N500 million to support the acquisition of critical medical supplies for healthcare professionals on the frontlines, the MTN Foundation has...
- Advertisement -
BrandsPur Weekly Cartoons
- Advertisement -CBN’s Real Sector Credit Drive: Yea Or Nay?CBN’s Real Sector Credit Drive: Yea Or Nay?