CBN cuts back savings account interest rate

Building complex of the Central Bank of Nigeria
Emeh Joy

The Central Bank of Nigeria (CBN) has instructed deposit money banks to review the interest payable on savings deposits to a minimum of 10 per cent per annum of the Monetary Policy Rate (MPR) as against the 30 per cent which was previously used.

The interest rate review is to take effect from September 1, 2020. The new rate is 1.25 per cent at the current MPR rate of 12.5 per cent.

The new rate is contained in a new CBN circular titled "Re: Interest Rate on Savings Deposit", which was issued on Monday and signed by the Director of Supervision, Bello Hassan.

"The circular read: The Central Bank of Nigeria has noted with satisfaction declining trend in market rates in the banking sector following the implementation of policies aimed among others at stimulating credit flow to the real sector.

"In line with recent market developments, the bank has reviewed the minimum interest payable on savings deposits as provided in its guide to charges by banks, other financial and non-bank financial institutions issued in December.

"Consequently, all deposit money banks are hereby informed that effective September 1, 2020, interest on local currency savings deposits shall be negotiable subject to a minimum of 10 per cent per annum of Monetary Policy Rate".

The CBN had in January had reviewed bank charges in line with market developments, after which it announced a cut in charges for electronic banking transactions.

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