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 the Monetary Policy Rate (MPR).
This takes savings interest rate from about 3.9 percent to 1.25 percent, with the MPR currently at 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.
The move is set to continue the financial repression unleashed by the CBN as savers will continue to get peanuts for keeping their funds in the banks.
Lenders may however benefit from lower interest expense costs on deposits customers have with them.