Business
CENTRAL Bank of Nigeria Governor, Godwin Emefiele, said most of the country’s banks have obeyed a directive to raise loan-to-deposit ratio to 60 per cent and those that fail to do so would face penalties by October 1.
According to him, “Compliance level has been excellent.”
He told Bloomberg TV in London on Tuesday that “not all the banks have complied, naturally. Sanctions will be administered by October 1.”
The apex bank ordered banks to increase lending by September 30 in a bid to shore up the economy, currently struggling to recover from a contraction in 2016, its first in a quarter of a century. The monetary authority wants to steer banks away from naira bonds, which offer hefty yields, and into consumer and corporate lending.
Some lenders have warned that extending more credit amid double-digit inflation could jeopardize the health of the banking system.
S&P Global Ratings warned last week that the directive is unlikely to unlock credit, unless the government addresses other structural bottlenecks to investment.
Meanwhile, CBN says it wants to see inflation at 9 per cent or below before considering cutting its key rate, and that will likely only happen next next year, according to Governor Godwin Emefiele. “How soon do I see interest rates coming down? I’m not seeing that coming this year,” Emefiele said in the interview. “During the course of 2020, we may be able to see that. But I can’t see that until we begin to see the numbers showing inflation is trending downward.”
The central bank held the monetary policy rate at 13.5 per cent last week for the third straight meeting after surprising the market in March with the first cut since 2015. While inflation has slowed from as high as 18.7 per cent in January 2017 to 11 per cent in August, it’s been outside the target band of 6 per cent to 9 per cent for more than four years.
“Unfortunately, it’s been sticky coming downwards as soon as it hit about 11 per cent,” Emefiele said. “The Monetary Policy Committee would love to see it at about 9 per cent before beginning to aggressively thinking about easing.”
Sunonline
-Sep 25, 2019 @ 08:45 GMT |
Tags: Banks in last minute rush to meet new lending ratio
