'No more zero balance' - CBN wants ATMs upgraded to give loans as UBA, 4 others fail to meet N65/N100 LDR rule

The Central Bank of Nigeria (CBN) has proposed a solution to enhancing credit accessibility within the country.

It suggests that banks upgrade their Automated Teller Machines (ATMs) to provide loan services.

The move is a response to recent data revealing that five major Nigerian banks failed to meet the CBN's loan-to-deposit ratio (LDR) of 65% during the 2022 financial year.

The loan-to-deposit ratio stipulates that banks must allocate N65 as loans for every N100 they have as deposits, ensuring a healthy flow of credit into the economy.

Access Holdings Plc, Guaranty Trust Holdings Company Plc (GTCO), United Bank for Africa Plc (UBA), Zenith Bank Plc, Sterling Bank, and Stanbic IBTC fell short of this requirement, as reported by ThisDay.

Digging into the specifics, Access Holdings recorded a 58.70% LDR in 2022, while Zenith Bank Plc's LDR stood at 51.6% in the same year.

GTCO closed 2022 with a 39.81% LDR, while UBA's LDR decreased to 34.87% in 2022 from 38.17% in 2021.

In 2022, Sterling Bank reported a 54.10% LDR, and the FCMB group completed the list of banks that fell short of the 65% target with a 60.30% LDR.

The CBN has proffered a practical solution in its Payments System Vision 2025 document in response to the suboptimal loan disbursement.

CBN recommends upgrading ATMs to incorporate credit scoring and facilitate loan disbursements.

The innovative step was captured in CBN'S Nigeria Payments System Vision 2025, published on its website.

Part of the document reads: “ATMs should be optimised to perform all other financial services outside cash – credit scoring, loans disbursement, and to be available in remote areas.”