The Lagos Chamber of Commerce and Industry has commended the Central Bank of Nigeria on its latest lending policy for deposit money banks.
The CBN had recently prescribed a minimum Loan Deposit Ratio of 60 per cent with effect from September 30.
LCCI in a statement signed by its Director -General, Mr Muda Yusuf, on Sunday, described the policy that focused on the Small and Medium Enterprises sector, retail, mortgage and consumer lending as a move in the right direction.
“The focus of the policy on SMEs, retail, mortgage and consumer lending under the proposed lending regime is laudable,” Yusuf stated.
He said that the Nigerian private sector had over the years grappled with issues of credit access, cost of credit and tenure of funds, adding that the challenges were more severe for MSMEs in the economy with huge financing gaps.
He said, “The economy has been characterised by profound crowding effect of the private sector in the financial markets owing to more attractive returns from credit to government through the instrumentalities of treasury bills and Federal Government bonds.
“These developments created considerable distortions in the financial markets and considerably impeded domestic investment. It created major financial intermediation issues as the banking system became largely disconnected from the investing public. The real sector investors and the SMEs were the foremost victims of this distortion.
“The high and attractive returns on government debt instruments was a major worry because they have zero risk and the earnings are tax exempt. Naturally, there was a gravitation of capital towards these investment windows, depriving the investment community of funds, posing major constraints to job creation and the advancement of the economy.”