CBN pegs interest payments on bank deposits at N2bn
The Central Bank of Nigeria (CBN) has said deposit money banks will no longer receive interest payments on deposits exceeding N2 billion. The CBN in a circular released yesterday said: “Any deposit by a bank in excess of 2 billion naira shall not be remunerated.”ADVERTISEMENT The central bank will pay interest to lenders on qualified …
CBN Governor, Godwin EmefieleThe Central Bank of Nigeria (CBN) has said deposit money banks will no longer receive interest payments on deposits exceeding N2 billion.The CBN in a circular released yesterday said: “Any deposit by a bank in excess of 2 billion naira shall not be remunerated.”
ADVERTISEMENTThe central bank will pay interest to lenders on qualified deposits at a rate determined by the monetary policy committee, the statement added.ADVERTISEMENTOVER 5,000 NIGERIAN MEN HAVE OVERCOME POOR BEDROOM PERFORMANCE SYNDROME DUE TO THIS BRILLIANT DISCOVERY. CLICK HERE TO KNOW MORE
Speaking on the new policy, the Head of Research at FSDH Merchant Bank, Ayodele Akinwumi said: “This means that the amount of excess money that Nigerian banks can place with the Central Bank of Nigeria (CBN) to earn overnight interest rate of 8.5% per annum has been reduced from N7.5billion to N2billion. Any amount in excess of N2billion will not earn interest income for banks.
ADVERTISEMENTOther analysts also toldDaily Trustthat the decision is meant to encourage the banks to lend more money to the real sector.It would be recalled that only last week, the apex bank ordered banks to increase their loan-to-deposit ratio to at least 60% by September or face penalty as it seeks to boost loans to the real sector and bolster growth.
Akinwumi said: “This, in a way, will reduce the interest income of banks going forward. It will also force banks to trade more with one another in the interbank market than before.“It may also reduce the cost of managing system liquidity for the CBN as the apex bank will now have access to more funds from the banking system at no cost than before.’’
He also disclosed that In addition, interbank interest rates may drop further as a result of increased system liquidity.“This is part of the efforts of the CBN to increase banks’ credit to the real sector of the economy in order to stimulate growth of the economy.”Read more: Daily Trust »
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