As you already know, the CBN has mandated all banks to loan out 60% of their deposits to businesses. To show their seriousness, they warned that banks that fail to meet up with this lending ratio will be fined 50% of their shortfall.
I am sure that most banks did not take this seriously enough, until the 30th of September, when CBN deducted a total of N499Billion from 12 banks for non-compliance.
The 12 banks are ZenithBank(135.6B), CitiBank (100B), UBA (99.7B), FirstBank (74.7B), Standard Chartered Bank (30B), GTB (25B), FCMB (14.4B), JAIZ Bank (7.5B), Keystone (4B), Rand (2.8B), FBNQuest (2.7B), SunTrust (1.7B)
I listed these banks and the amounts debited, so you know which ones are the hardest hit, and thus more desperate to meet the target next time.
To make matters worse for the banks, the CBN immediately increased the lending ratio to 65%, so right now, either the banks loan out the money or they will lose half of it for nothing!
Several things are already happening that will definitely have a huge impact on the economy in the coming months and years.
Banks are forced to actively start looking for good projects and businesses to loan out money to. They are now spending the same energy they use in recruiting new customers in also looking for viable businesses to invest. This is because the more deposit they have, the more money they have to loan out in order to meet up with CBN Loan-to-deposit (LDR) ratio.
Banks are currently restructuring their loans by increasing the loan term and decreasing the interest rate, so as to make their loan packages more attractive and also reduce the number of bad loans. They will rather receive much less than the 23% interest they are used to, instead of losing the money entirely to CBN
This is another wonderful news for entrepreneurs, as they will now have more time to repay their debts and they will spend less money on servicing it.
If this policy is sustained, it has the potential to change the business landscape in Nigeria and it will have a serious impact on you as a business person.
So what should you do?
First, take a look at the banks I mentioned above. If you are already in business and have a business account with any of the most affected banks, then I will advise you to package your business proposal and meet with your account officer.
Believe me, they are extremely motivated right now to listen to you.
– additional report