AN increase in the Loan to Deposit Ratio of Banks in the economy will not increase the non-performing loans in the lending institutions, according to the Bank Directors Association of Nigeria.
The Secretary to the BDAN, Dr Jude Monye, who spoke do our correspondent during the 22nd annual general meeting of the association, said that the Loan to Deposit Ratio initiative of the Central Bank was a policy in the right direction.
He said improved lending to the real sector was relevant to boost activities in the economy.
Monye said, “There is nothing that shows that when you increase credit, nonperforming loan will increase. Yes, it is bound to happen, but once the banks can stick to their criteria before they give a loan, eventually the loan will perform.
“There are certain criteria the bank carries out before they give a loan. The fact that they are saying give the minimum LDR does not mean the banks should be reckless. They are saying be professional and implement all your risk assets to the borrowing customers.”
He said the banks were ready to give out loans, but there was also a need increase awareness on why people should repay their loans.
Monye said BDAN had a mission to develop a sustainable practice in the industry, and collaborate with partners of various interest groups such as the CBN, Nigerian Deposit Insurance Corporation, Body of Bank CEOS and other capacity building institutes like the Chartered Institute of Bankers of Nigeria.
He said BDAN was also collaborating with other professionals that train in Australia, America, the United Kingdom and in the Middle East on training for the directors and bankers.