CBN places $1.4 billion fine on 12 banks for refusal to grant loans to customer

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The Central Bank of Nigeria (CBN)  has fined 12 major banks  N499.1billion for breaching its guidelines on lending to the real sector of the economy.

According to an approved debit instruction, the affected banks and the amount they will pay are: Citibank (N100,743,055, 321); First Bank of Nigeria (N74,668,880,480); FBNQuest Merchant Bank (N2, 697,456,144); First City Monument Bank (FCMB), (N14, 371,064, 742) and Guaranty Trust Bank (N25, 147, 933, 628).

Others are Jaiz Bank (N7, 525, 165,552); Keystone Bank (N4, 162, 938, 879); Rand Merchant Bank (N2, 823,177,399); Standard Chartered Bank (N30,027,137,984); SunTrust Bank (N1,703,205,427); United Bank for Africa (N99,676,181,916) and Zenith Bank (N135,629,337,625).

It was learnt that the banks will lose the money at source from their Cash Reserve Requirement (CRR) with the CBN.

The apex bank earlier ordered  all commercial banks in the country to give their customers N65 as loans for every N100 they have as deposits.

The directive means that deposit money bank’s loan-to-deposit ratio (LDR) must now be 65 per cent, from the initial 60 per cent.

A CBN circular: “Regulatory Measures to Improve Lending to the Real Sector of the Nigerian Economy,” says in order to ramp up economic growth through investment in real sector, the CBN approved that all banks should maintain a minimum LDR of 60 per cent by September 30.

Reported stated any failure to meet the minimum loan to deposit ratio of 60 per cent would attract a levy of fine which is additional CRR equal to 50 per cent of the lending shortfall of the target.

Central bank of Nigeria (CBN) Governor Godwin Emefiele had said that banks that fail to meet its directive on the 60 per cent LDR would be penalised at the expiration of the deadline.

CBN Director, Banking Supervision, Ahmad Abdullahi, said: “Failure to meet the above minimum LDR by the specified date shall result in levy or additional Cash Reserve Requirement equal to 50 per cent of the lending shortfall of the target.”

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