‘Why CBN should shelve loan to deposit ratio policy’

“Unless you are buying a stock that you know is going to be very cheap and it has value in dollar terms, the short everybody does is to think about speculating in foreign exchange, so these are the things that are making it impossible for the stock ...

Expert in the financial market has flayed the Central Bank of Nigeria decision to retain Loan to Deposit Ratio at 65 per cent, urging the apex bank to reconsider its stance in order to forestall further depreciation of banking stocks in the nation’s stock market.

He noted that the new policies have impacted negatively on share prices of banking stocks, which have continued to witness a free fall thereby, depressing the All-share index and market capitalisation. “Unless you are buying a stock that you know is going to be very cheap and it has value in dollar terms, the short everybody does is to think about speculating in foreign exchange, so these are the things that are making it impossible for the stock market to function.”

However, analysts have argued that the new LDR policy has the potential to negatively impact the quality of banks’ loan portfolio in their attempt to meet the CBN target which could further increase the already high Non-Performing Loans especially in an economy beset by high inflationary trends and diminishing consumer demands.

The CBN disclosed this in a letter signed by the Director of Banking and Supervision, Bello Hassan, to all banks on, “Regulatory measures to improve lending to the real sector of the Nigerian economy

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