The Central Bank of Nigeria’s loan-to-deposit ratio policy has compelled deposit money banks in the country to approve N2.63 trillion worth of consumer loans for customers.
This was revealed in the quarterly report of the CBN seen by THE WHISTLER.
The apex bank said the loan amount was achieved by the end of the second quarter of 2023. The loans were taken in the form of personal loans and retail loans.
The development shows a 12.2 per cent improvement in the approval of consumer loans, rising from N2.35trn in the first quarter of 2023 to N2.64trn recorded in the second quarter of 2023.
“Total consumer credit increased significantly by 12.2 per cent, to N2.63trn in the second quarter of 2023, compared with N2.34trn billion at the end of the preceding quarter,” CBN said.
The components of consumer credit revealed that personal loans accounted for the larger share, amounting to N1.92trn, representing 72.9 per cent of the total.
Retail loans accounted for 27.1 per cent which is an equivalent to N715.10bn.
According to the Central Bank, the improvement in the loans was due to its LDR policy which was instituted to increase lending to the real sector in order to grow the economy.
The CBN said, “Consumer credit improved owing to increased demand for personal loans and strengthened enforcement of the Loan-to-Deposit Ratio (LDR) policy.”
The LDR policy compels banks to issue 65 per cent of their deposits as loans.
The apex bank in October 2019 raised the Loan to Deposit Ratio of banks to 65 per cent. The Bank, however, extended the deadline of 65 per cent LDR to March 31, 2020.