Wednesday, October 21, 2020
Home > news articles > CBN asks Banks to peg interest on savings deposits at 10% minimum per annum

CBN asks Banks to peg interest on savings deposits at 10% minimum per annum

image_pdfimage_print

..effective Sept. 1, 2020 …it will undermine savings appetite of Nigerians, says analyst

The Central Bank of Nigeria (CBN) has directed all deposit money banks that effective Tuesday September 1, 2020 interest on local currency savings deposits shall be negotiable subject to a minimum of 10 percent per annum of Monetary Policy Rate (MPR).

This takes savings interest rate from 3.9percent to 1.25 percent, given that savings interest rate is now 10 percent of MPR, which is 12.5percent.
In an August 31 letter to all banks signed by Bello Hassan, Director of Banking Supervision, CBN said it noted with satisfaction the recent 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 the 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 2020”, CBN said in the letter.
An industry analyst told BusinessDay that “Whilst this helps banks to reduce their cost of funds, it further undermines the savings appetite of Nigerians.”
“Interestingly, the policy reinforces CBN’s position of stimulating real sector investment whilst discouraging perennial investment in financial assets, which creates limited economic value add, given the relatively weak transmission mechanism of financial investments into real sector productive activities,” he added.

“It’s positive for banks’ stocks, particularly the likes of FBN that has a notable savings account portfolio of over a trillion. This 250 basis points (bps) savings on interest on savings account can potentially lead to some N15billion – N20billion savings in funding cost, which washes down to the bottomline to improve the bank’s profitability”, the analyst added.

READ  Oracle wins bidding war for TikTok’s US operations

Get real time updates directly on you device, subscribe now.

Start earning cryptocurrency/gram today with no investment by taking rolls, watching videos, referring, signing smart contract etc. Earn 500 grams($1000) like i do with no investment. Click here to join

Share Button
Pls SUBSCRIBE below to our Youtube channel and mailing list to get fresh updates on money making and inspiring videos and articles.
Akinola
Akinola
Akinola Olusegun is a blogger and publisher of this blog, money247.com.ng. You can also check out his other blogs : segtv.com.ng (videos & news), letgoonline.com.ng (e-commerce), letgoonline.com.ng/blog (news) among others. Follow him via any or all of his social media pages to get fresh posts update.
http://www.money247.com.ng

Leave a Reply

Your email address will not be published. Required fields are marked *