CBN raises interest on savings deposits to 4.2% from 1.4%

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The Central Bank of Nigeria (CBN) has ordered Nigerian banks to pay savings deposit accounts an interest rate of at least 4.2%, an increase from the 1.4% previously charged.

This was in a circular seen by Nairametrics, dated August 15, 2022, titled “Savings Deposit Interest Rate Review” and signed by Haruna B. Mustafa, Director of Banking Supervision.

According to the apex bank, the increase in savings interest rates, which has been effective since August 1, was carried out in view of the return to complete normality after taking into account current macroeconomic conditions.

The circular reads: “It should be recalled that as part of efforts to mitigate the impact of the COVID 19 pandemic, the Central Bank of Nigeria has reduced the minimum interest rates payable on deposits of savings in local currency from 30% to 10% of the Monetary Policy Rate (MPR). This was intended to stimulate growth in the economy as a whole following the economic downturn occasioned by the pandemic.

The apex bank noted that Nigeria has returned to economic normality, the bank said “after the return to full normalcy and given the prevailing macroeconomic conditions, it became necessary to make an upward adjustment in the interest rate. ‘interest payable on savings deposits in local currency’.

“As a result, from 1 August 2022, the minimum negotiable interest rate on savings deposits in local currency will be 30% of the MPR. This supersedes our letter dated BSD/DIR/GEN/LAB/13/052 on the subject. September 1, 2020,” the CBN said.

The CBN circular reads as follows; “It should be recalled that as part of efforts to mitigate the impact of the COVID 19 pandemic, the Central Bank of Nigeria has reduced the minimum interest rates payable on local currency savings deposits by 30% at 10% of the monetary policy rate (MPR).

“This was intended to stimulate growth in the economy as a whole following the economic downturn occasioned by the pandemic.”

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