With just few days to the September 30 deadline given by the Central Bank of Nigeria (CBN) to banks to implement the 60 per cent minimum Loan to Deposit Ratio (LDR), commercial banks are a desperate bid to woo customers for loans to balance their sheet.
Recall that the apex bank had mandated banks to give out 60 per cent of their deposits as loans. The regulator said banks that did not comply with the directive would have their Cash Reserve Ratios (CRR) increased.
Investigations by BluePrint shows that number of commercial banks’ that hitherto shy away from supporting SMEs and loan access are now pursuing depositors with all manner of loan packages so as to beat the of growing loans by N800bn following CBN’s directive.
Fact checks across some banks showed that whereas several Deposit Money Banks (DMBs) in the country have grown the loan book by N800 billion in an aggressive drive to comply with the 60 per cent Loan-to-Deposit Ratio (LDR) mandate given by the apex bank, a few banks have been fingered by experts as not being able to meet the deadline after all.
The industry average lending rate is around 23 to 26 per cent per annum, but premium borrowers still get credit at 16 to 17 per cent per annum.
Analysts say part of the reasons for not meeting up the deadline include conditions attached to the loans which discourage customers’ interests.
Confirming the development during the presentation of banking sector report in Lagos, Senior Analyst, Banking & Insurance Department at Agusto & Co, Mrs. Ada Ufomadu, said Tier-1 banks are now going for big and credible borrowers in Tier-2 banks, offering them reduced lending rates for new loan plan.
According to Ufomadu, the focus of the LDR minimum is to promote consumer and mortgage credit to drive demand.
She said: “Most Tier 2 banks comply with the new LDR minimum requirement, but not all Tier- 1 banks have complied with the CBN policy and short timeline for the policy implementation remains a challenge.”
