The Central Bank of Nigeria (CBN) has directed banks in the country to pay savings deposit accounts an interest rate of at least 4.2%. This is an increase from the previous rate of 1.4%, Nairametrics reported.
4.2% represents 30% of the Monetary Policy Rate (MPR) which the CBN recently hiked to 14%.
The CBN order was contained in a circular dated August 15, 2022, titled “Review Of Interest Rate On Savings Deposits” and signed by Haruna B. Mustafa, Director Of Banking Supervision, according to the report.
The rate increase which is effective from August 1, 2022 is due to “return to full normalcy and considering the prevailing macroeconomic conditions,” the CBN said in the circular.
The circular reads “It will be recalled that as part of the efforts to ameliorate the impact of the COVID 19 pandemic, the Central Bank of Nigeria reduced the minimum interest rates payable on local currency savings deposits from 30% to 10% of the Monetary Policy Rate (MPR). This was aimed at stimulating growth in the larger economy following the economic-slowdown occasioned by the Pandemic.”
“Following the return to full normalcy and considering the prevailing macroeconomic conditions, it has become necessary to effect an upward adjustment of the interest rate payable on local currency savings deposits.”
“Accordingly, effective August 1, 2022, the negotiable minimum interest rate on local currency savings deposits shall be 30% of MPR. This supersedes our letter dated BSD/DIR/GEN/LAB/13/052 on the subject. September 1, 2020,” the CBN said.
Ifunanya Ikueze is an Engineer, Safety Professional, Writer, Investor, Entrepreneur and Educator.