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The Central Bank of Nigeria (CBN) has instructed deposit money banks in Nigeria not to pay less than 1.25% in interest on savings deposit accounts.
This was contained in a circular seen by Nairametrics and dated August 31, 2020. Excerpts of the circular read as follows;
“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 2019.
“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 annum of Monetary Policy Rate.”
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Context: The Monetary Policy Rate (MPR) is the rate at which the CBN lends money to banks. It is a benchmark rate for lending in the financial services sector. MPR is currently 12.5%. Savings deposit rates are default rates banks pay customers for keeping their money in the banks. According to people familiar with CBN rate applications, the rate used to be 30% of MPR but has now been reduced further by the CBN. The savings deposits rate is mostly overlooked by Nigerians due to its historical low rate. CBN websites put the rate at about 3%.
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What this means: When you keep money in your savings deposit accounts you will be paid at least 1.25% per annum by banks. When you consider that inflation rate is 12.8%, then this is almost like paying banks to keep the money for you.
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Did you mean 1.25% in your concluding paragraph?
The what this mean is not correct. You will be paid a minimum of 10% of 12.5% which is 1.25% per annum. Please update
God bless u
But truly the average Nigerian have been indifferent to interest rate on savings account: historically its been low. But i think there is nothing special about this. The body language of the CBN has always been against financial investment, and pro-real sector investment. The funny thing about this pro-real investment is that it sounds like putting square peg in round whole. What CBN should have first done is liaise with the Fiscal authorities to set budget planning that will facilitate a suitable business environment. The cost of doing business in Nigeria is crazy. If the environment for doing business is fine, the monetary policies around that bit is just an icing on the cake.
Who are the owners of the banks? The politicians, Nigerian leaders in and outside of government. After stealing from our commonwealth they still went to wait for us where our money is. I cannot see how the poor can get out of their clutches if God do not show up foe the poor.
Please what was the former interest rate ?
Dear Chike olisah is it a plus or minus for the poor?
Wow! Just 1.25% per annum on saving account? So, what is interest rate on loan? 16 to 17%? Is that sensible? No , This has no logic to me
Actually, I never knew much about MPR and interest rates but as an ordinary Nigerian who does only savings as far as banking is concerned, I really came to see a significant effect of the recent development stemming from the CBN directive such that the interest capitalised for the month of September in my savings account was slashed to one-third of what it used to be (a miserable N600 plus) compared to the previous month where I was given N2000 plus. 2K in a month can at least help me do a TV or data subscription but now it becomes practically impossible with a miserable N600. Such a pity.
I don’t even receive any atall in from Fcmb rather they take from mine which bank is the best when it comes to interest rate on savings account for now?