As demand among small and medium-sized enterprises (SMEs) and households grows, Nigerian banks are offering unsecured loans that do not require collateral.
This rise is the result of the CBN’s recent loan-to-deposit ratio (LDR) policy, which requires banks to increase actual sector lending in order to improve economic growth.
Godwin Emefiele, Governor of the Central Bank of Nigeria, recently made some difficult decisions to address the challenges afflicting the real sector and, more broadly, the Nigerian economy.
On July 3, 2019, the CBN launched the LDR, instructing banks to maintain a 60 percent reserve ratio beginning September 30, 2019.
According to the latest CBN consumer credit report, demand for unsecured credit card lending increased to 9.4 index points in the fourth quarter (Q4) of 2020 from 4.9 points in the first quarter of the same year, according to BusinessDay.
Banks that advertise no-collateral loans on their websites include: Access Bank, which provides SMEs with loans of up to N10 million without requiring collateral; Fidelity Investments (N10m) The First Bank (N10m) Polaris Bank (N30m), GTBank (N30m) (N10m) Standard Chartered Bank (Standard Chartered) (N20m) Zenith Bank (N50m) Union Bank (N10m)
For example, First Bank of Nigeria Limited has created a number of salary products for working Nigerians who have domicile salary accounts. According to the bank, its no-collateral loan offers are intended to help people unlock their existing wealth.