CBN Boosts Economy With N3.3tr Credit

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THE Central Bank of Nigeria (CBN) on Monday said it has facilitated a credit of N3.3trillion to the productive sectors of the economy.

It has also given intervention funds to businesses affected by the COVID-19 pandemic and endorsed the restructuring of loans.

CBN Governor Godwin Emefiele said the loans were granted to manufacturing (N815billion), retail and consumer loan (N615billion), agriculture, forestry and fishery (N255bilion), general commerce (N221billion) and information and communications technology (N208billion) through the implementation of the Loan-to-Deposit Ratio (LDR).

He spoke at the end of the Monetary Policy Committee (MPC) meeting in Abuja.

CBN, he said, adjusted the LDR to 58.5 per cent by May.

The LDR is reviewed quarterly to improve lending to the real sector.

It was pegged at 60 per cent in September 2019 following CBN’s directive to all banks to maintain the rate as a minimum LDR.

Emefiele said the introduction of the LDR has improved credit to key sectors, as loans from banks to the sectors has increased from N15.6trillion in June 2019 to N18.9trillion a year later.

The CBN governor also confirmed the disbursement of N49.195 billion of the approved N50 billion Targeted Credit Facility (TCF) (COVID-19) loan to 92,000 beneficiaries as of June 30.

He said the banking system remains very strong, as non-performing loans were 11.1 per cent in May last year but dropped to 6.4 per cent as of June this year.

“For Capital Adequacy Ratio (CAR) which measures the size of capital that a bank deploys into risk asset, as at June 2019, CAR was 15.2 per cent but as at June 2020, it remains flat at 15 per cent.

“Liquidity ratio, in August 2019, was 48 per cent but as of June 2020, it had dropped to 37 per cent.

“In spite of these large sums granted, from N15.6trillion to about N18.9trillion, the prudential ratios are still looking so strong.

“This is a clear demonstration that the Nigerian banking sector remains very strong and resilient and able to support the economy,” Emefiele said.

Emefiele said the health crisis occasioned by the pandemic would have resulted in a doomsday for the banking industry and the economy and the loans would have gone bad if the CBN did not ask the banks to offer forbearance to customers.

As a result, Emefiele said 22 out of 27 banks have come to the Central Bank to restructure 35,640 of their customers’ loans of about N7.8trillion.

“This constitutes 41 per cent of the total industry loans which is N18.9trillion,” he said.

Emefiele said he would be happy if the forbearance was 65 per cent of the N18.9 trillion instead of the current N7.8trillion, which he considers small.

“We are working with the banks to give more forbearance to those customers. If we see forbearance moving to 60 or 65 per cent, we will get more comfortable that we have been able to turn the corners by assisting businesses to get over their business challenges,” he said.

On the COVID-19 intervention fund, the CBN Governor said over N152.9billion has been disbursed to 61 manufacturing companies from the N1trillion allocated to the sector.

Under the Agricultural Small and Equity Intervention Fund, Emefiele said the CBN has funded 11,613 crisis-ridden businesses with over N41billion.

It was agreed at the end of Monetary Policy Committee meeting that the Monetary Policy Rate should be retained at 12.5 per cent, same as the Asymmetric Corridor of +200/-500 basis points around the MPR.

The MPC also agreed to retain the Cash Reserves Ratio (CRR) at 27.5 per cent, as well as the Liquidity Ratio at 30 per cent.

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