CBN exposes banks, customers’ fraudulent deals over loan to deposit ratio
The Central Bank of Nigeria (CBN) has read the riot act to banks and their customers engaging in shady and fraudulent deals intended to circumvent the loan to deposit ratio policy.
The apex bank had initially set the LDR at 60% before raising it to 65% with a December 2019 deadline.
READ ALSO! For failing to give out ‘adequate loans’, 12 banks fined N499bn
While this has led to lower lending rates, some banks are now giving loans to customers who go on to buy treasury bills and other securities at CBN’s open market operations.
But the CBN has instructed banks to reverse the Treasury Bills of customers suspected of conducting such fraudulent deals which is referred to as arbitraging.
Scammers hack UBA server, cart away N752m
Speaking on the sidelines of the IMF and World Bank meetings in Washington DC, the CBN spokesman, Isaac Okorafor, said banks and customers will be punished and blacklisted for arbitrage.
He said,
How To Empower Yourself And Generate Income From Mutual Funds
“Our policy is meant to spur manufacturing output. We have started to see banks now marketing their customers for loans including consumer credits and mortgages,” he said.
“Now that these are coming at low rates, manufacturing companies should concentrate on their manufacturing businesses and not on arbitrage. This is how manufacturing output and GDP can be boosted.
“Any customer found arbitraging will be blacklisted, names will be published in the newspapers and the banks will be penalised.”
“Nigerians have been praying for low rates. So if borrowing rates from banks are coming down, companies should take the loan to conduct their manufacturing business and not get involved in arbitrage.
“We are saying banks must lend. So we prescribed the LDR. Now that they are ready to lend and at reasonably low rates not buying securities, people should not borrow to buy securities thereby arbitraging.
VAT threshold of N25m: All you need to know
“The economy must see growth induced by higher consumer and manufacturing output. We will be tough on banks and companies that would attempt to game our policies through financial markets arbitrage.”
Call 0803 239 3958 for free financial consulting advice for your businesses.
Send your accounting articles to blog@skytrendconsulting.com.
READ ALSO!
Scammers hack UBA server, cart away N752m
Businesses With Less Than N25m Turnover Are Now VAT Exempt
Skytrend Consulting: Financial services and accounting solutions company
How to get quick loans from Gtbank, Zenith, UBA, Access Bank without collateral
Access Bank non-collateralized emergency loan hits N1bn daily: How you can benefit…
VAT threshold of N25m: All you need to know
PAYE: How to calculate personal income tax
Skytrend Consulting: Financial services and accounting solutions company