The Central Bank of Nigeria (CBN) has announced an upward adjustment of the negotiable minimum interest rate payable on local currency savings deposits to 30 per cent of the Monetary Policy Rate (MPR).
In September 2020, the central bank, as part of efforts to mitigate the impact of the COVID-19 pandemic, had slashed the minimum interest rate payable on Naira savings deposits from 30 per cent of MPR to 10 per cent of MPR.
The bank had explained that the move was aimed at stimulating growth in the larger economy following the economic slowdown caused by the pandemic.
The apex bank, in a letter addressed to all banks and titled, “Review of Interest Rate on Savings Deposits”, which was dated August 15, 2022 and signed CBN Director, Banking Supervision Department, Mr. Haruna Mustafa, stated that it became necessary to review the rate back to 30 per cent of MPR following the return of normalcy in the economy and considering the prevailing macroeconomic conditions.
According to the CBN, the effective date for the implementation of the new circular was August 1, 2022 and further superseded the earlier correspondence on the subject matter.
However, CBN while announcing the reduction of the minimum interest rate payable on local currency savings deposits to 10 per cent of MPR last year, observed with satisfaction, the declining trends in market rates in the banking sector following the implementation of policies aimed at stimulating credit flows to the real sector among others.
As a result, the apex bank reviewed interest payable on savings deposits as provided in its Guide to Charges by Banks, Other Financial and Non-Financial Institutions issued in December 2019.
Consequently, the interest rate on local currency savings deposits was reduced to 10 per cent of MPR.