CBN Reviews Interest on Savings Deposits

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The Central Bank of Nigeria (CBN) 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.

With this, effective today (September 1, 2020), interest on local currency savings deposits shall be negotiable subject to a minimum of 10% per annum of Monetary Policy Rate (MPR), as against the 30% it was previously.

The CBN stated this in a letter to all banks dated August 31, 2020, signed by its Director of Banking Supervision, Bello Hassan, a copy of which was made available to Brand Spur.

The Apex Bank stated that it took the decision because it had noted, “with satisfaction the recent declining trend in market rates in the banking sector following the implementation of policies aimed amongst others, at stimulating credit flow to the real sector.”

“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 cent per annum of Monetary Policy Rate.”

The apex bank had last December, announced the downward review of charges for electronic banking transactions; review of other bank charges to align with market development and the inclusion of new sections on accountability/responsibility and a sanction regime to directly address instances of excess, unapproved or arbitrary charges.

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IMPLICATION

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.