LOCAL AFRICAN REALITY

Breaking

CBN to go tough on banks over loan to deposit ratio


The Central Bank of Nigeria said it would sanction banks and their customers over fraudulent deals intended to circumvent the loan to deposit ratio policy.

The apex had initially set the LDR at 60 per cent before raising it to 65 per cent with a December 2019 deadline.

While this has led to lower lending rates, some banks are now giving loans to customers who go on to buy treasury bills and other securities at CBN’s open market operations.

But the CBN has instructed banks to reverse the Treasury Bills of customers suspected of arbitraging.

Speaking on the sidelines of the IMF and World Bank meetings in Washington DC, the CBN spokesman, Isaac Okorafor,  said banks and customers will be punished and blacklisted for arbitrage.

He said, Our policy is meant to spur manufacturing output. We have started to see banks now marketing their customers for loans including consumer credits and mortgages,” he said.

“Now that these are coming at low rates, manufacturing companies should concentrate on their manufacturing businesses and not on arbitrage. This is how manufacturing output and GDP can be boosted.

“Any customer found arbitraging will be blacklisted, names will be published in the newspapers and the banks will be penalised.”

He said Nigerians have been praying for low rates. “So if borrowing rates from banks are coming down, companies should take the loan to conduct their manufacturing business and not get involved in arbitrage.

“We are saying banks must lend. So we prescribed the LDR. Now that they are ready to lend and at reasonably low rates not buying securities, people should not borrow to buy securities thereby arbitraging.

“The economy must see growth induced by higher consumer and manufacturing output. We will be tough on banks and companies that would attempt to game our policies through financial markets arbitrage.”(Punch)

No comments:

Disclaimer
Most News articles reported on LOCAL AFRICAN REALITY are a reflection of what is published in the media. LOCAL AFRICAN REALITY is not in a position to verify the accuracy of daily news articles, however, we ensure that only news articles from credible sources are reflected in this service. Independent opinions which are mailed to us may also be published from time to time at our discretion, however the sources for these independent articles will be clearly stated.


Share your story with us: SMS: +23409067561649, Whatsapp: +2349067561649, Email: localafricanreality@gmail.com or qubesentertainmentmagazine@yahoo.com
Receive Alerts on: Whatsapp: +2349067561649, Twitter: @localafricanr