What Central Bank of Nigeria’s Latest Policy on Loan-Deposit Ratio Means for Entrepreneurs 

The Central Bank of Nigeria has followed up its earlier decision to increase the Cash Reserve Ratio for Nigeria’s deposit money banks with another policy on Loan deposit ratio (LDR).

Banks , before now, could only lend out 35 percent of their deposits to borrowers.

But the apex bank’s acting director of Banking and Supervision said the ratio has undergone a review.

According to Adetona Adedeji in a letter he addressed to all banks, the LDR now stands at 50 percent.

“Following a shift in policy stance towards a more contractionary approach, it is imperative for the LDR policy to align with the current monetary tightening of the CBN,” he said.

CBN’s Gov Olayemi Cardoso and the Monetary Policy Committee have favoured tighter policies amidst the high inflation rate Nigerians now contest with.

Adedeji said the decision provides the real sector of the economy to have access to more lending.

For entrepreneurs ever in need of capital, that makes some good news. The banks now have more fund to devote to lending.

Business  analysts often complain of Nigerian banks dumping its responsibility of  financing the real sector, and doubling down on forex trading.