By Dipo Olowookere
Six Deposit Money Banks (DMBs) listed on the Nigerian Stock Exchange (NSE) as well as six other lenders have been fined nearly N500 billion by the Central Bank of Nigeria (CBN) for failing to meet the 60 percent loan to deposit ratio before Monday, September 30, 2019.
The apex bank had in July 2019 directed all banks in the country to give 60 percent of their total deposits as loans to customers, threatening to fine any company that fails to comply with this.
Business Post reports that the central bank came up with this loan policy to stimulate economic growth by promoting lending to the real sector of the economy.
After the deadline on Monday, the apex bank released another circular, raising the LDR to 65 percent and gave the lenders till December 31, 2019 to meet up or be further sanctioned.
The CBN, in an approved debit instruction, took the sum of N499.1 billion from 12 financial institutions that failed to meet the requirements before the deadline this week and from what Business Post gathered, six of them are quoted firms.
These banks are First City Monument Bank (FCMB), which was sanctioned N14,371,064,742; First Bank of Nigeria, a flagship subsidiary of FBN Holdings Plc, was fined N74,668,880,480; Guaranty Trust Bank (GTBank) was sanctioned N25,147,933,628; Jaiz Bank got a fine of N7,525,165,552; United Bank for Africa (UBA) got a fine of N99,676,181,916; while Zenith Bank received the highest sanction of N135,629,337,625.
Other lenders also punished by the CBN were Citibank, which was asked to pay N100,743,055, 321; FBNQuest Merchant Bank was requested to pay N2,697,456,144; Keystone Bank got a fine of N4,162,938,879; Rand Merchant Bank received a fine of N2,823,177,399; Standard Chartered Bank was asked to pay N30,027,137,984; while SunTrust Bank received a fine of N1,703,205,427.
According to the CBN, the 12 affected lenders will lose the money at source from their Cash Reserve Requirement (CRR) domiciled with it (CBN). The CRR is a portion of the banks’ deposits kept with the CBN for regulatory reasons.
