Central Bank Lowers Base on Savings Deposit Rates, Now Negotiable

Tuesday, September 1, 2020

The Central Bank of Nigeria lowered the minimum interest rate payable on savings deposits by a third, while making them negotiable between banks and their customers.

Shoppers: central bank discouraging saving.

Banks will now pay a minimum of 10 percent of the Monetary Policy Rate, the Central Bank of Nigeria said in a new circular signed by Bello Hassan,  its director of banking supervision, which takes effect from September 1.

With the MPC rate currently at 12.5 percent, the directive translates to a minimum interest rate of 1.5 percent a year. While giving the saver a chance to bargain for more, it also ends the previous rule that kept interest rate on savings at a minimum of 30 percent of the MPC rate.

The move is in line with the the central bank’s policy of “stimulating credit flow to the real sector,” Hassan said, noting the regulator’s satisfaction with “the recent declining trend in market rates.”