Mohammed Shosanya
The Central Bank of Nigeria (CBN),has compelled banks to vacate a Post-No-Debit (PND) restriction earlier imposed on bank accounts of 440 individuals and companies.
The central bank communicated the action in a circular, dated July 25, 2023 which was signed by A.M. Barau, on behalf of the CBN Director, Banking Supervision Department, and addressed to all banks.
It reads: “You are hereby directed to vacate the Post-No-Debit restriction placed on the accounts of the underlisted bank customers at our instance.”
It further ordered the banks to inform the concerned customers of the vacation accordingly.
The affected accounts included Fortune-K Resources and Investment Nigeria Limited, Voomos Limited, BoxII Limited, OP Amber, KIIPay Limited, Blake Excellence Resort, and Vanu Nigeria Limited. Others were Bakori Mega Services, Ashambrakh General Enterprise, Namuduka Ventures Limited, Crosslinks Capital and Investment Limited, IGP Global Synergy Limited, Davedan Mille Investment Limited and Urban Laundry, Advanced Multi-Links Services Limited, Spray Resources, Al-Ishaq Global Resources Limited, Himark Intertrades, Charblecom Concept Limited, Wudatage Global Resources, Whales Oil and Gas, Mosinox Oil and Gas and A.A. Gwad Ventures.
Those also included;Treynor Soft Ventures, Fyrstrym Global Concepts Limited, Samarize Global Nigeria Limited, and Zahraddeen Haruna Shahru, FirmCoin Resources and SIBT Acuracy, CrossLinks Energy Limited, among several others.
Besides,the apex bank disclosed that it would resume the enforcement of LDR policy effective July 31, 2023.
It explained that the move was sequel tothe January 7, 2020, directive which required banks to maintain a minimum LDR of 65 per cent.
The apex bank, in a letter addressed to the banks and signed by Abu Shebe, on behalf of the CBN Director, Banking Supervision, further explained that the resumption of enforcement was in line with the objective of the policy and the need to moderate industry excess liquidity.
The CBN warned that DMBs with LDR below the minimum requirement as of the date, and monthly thereafter, would be liable to a Cash Reserve Requirement (CRR) surcharge of up to 50 per cent of the lending shortfall implied by the target LDR.
The bank added that the DMBs would be duly notified of their respective LDR position and basis of surcharges if any.
On July on July 3, 2019, the central bank, in an effort to stimulate the economy, mandated banks to keep a minimum LDR – defined as loan to funding ratio – of 60.0 per cent which was later reviewed upward to 65.0 per cent on September 30, 2019, to encourage banks to increase consumer, mortgage, and corporate credits thereby stimulating aggregate demand, output growth, and employment.
The LDR is the total value of loan facilities issued divided by the aggregate value of deposits mobilized and has both liquidity and solvency implications in the short-medium, and medium to long-term horizons.
According to the CBN, this underscores the need to measure the impact of LDR on banks’ liquidity to ensure the achievement of the mandate of the bank – to promote a sound financial system in the country – without compromising the health of domestic banks.