The Central Bank of Nigeria has directed the commercial banks to jerk up the interest rate payable to savings deposits from 10 to 30 percent of the Monetary Policy Rate, MPR. By this order, customers who save more in a local currency in the commercial banks will receive more interest on their savings. The directive from the apex bank was released on 15th August 2022 by the Director of the Banking Supervision Department, Mr. Haruna B. Mustafa.
Accordingly, the baseline interest rate in banking protocol determines every other rate used in the economy which is currently pegged at 14 percent by the supervising bank.
Last month the apex bank raised the MPR from 13 to 14 percent to checkmate rising inflation in the country which according to financial experts stood at 17 years higher of the 19.64 percent recorded in July.
With the new law, bank depositors can make as high as 4.2 percent interest on their savings deposit against the former 1.4 percent.
The CBN official explained that the lender of last resort made this decision to take care of the current macroeconomic conditions obtainable in the economy.
He revealed that the order take effect from 1st August 2022.
Mustafa in the said circular disclosed, “It will be recalled that as part of the efforts to ameliorate the impact of the COVID 19 pandemic, the Central Bank of Nigeria reduced the minimum interest rates payable on local currency savings deposits from 30% to 10% of the monetary policy rate (MPR),”
“This was aimed at stimulating growth in the larger economy following the economic slowdown occasioned by the pandemic.”
He added, “However, following the return to full normalcy and considering the prevailing macroeconomic conditions, it has become necessary to effect an upward adjustment of the interest rate payable on local currency savings deposits.