CBN cuts interest on deposits above N2bn

The Central Bank of Nigeria (CBN) has cut the amount of money companies can keep in interest bearing accounts with it.

The new measures is aimed at forcing lenders to extend more credit .
Banks will no longer receive interest payments on deposits exceeding N2 billion, the Central Bank of Nigeria said in a statement posted on its website on Wednesday night. 

According to the Apex bank it compares with a previous limit set in 2014 of N7.5 billion through the central bank’s standing deposit facility.

The move comes less than a week after the central bank ordered lenders to use at least 60 per cent of their deposits for loans by the end of September, or have their cash reserve requirements increased, meaning they’ll be forced to leave more of their cash with the central bank.

“The rule is geared at making banks lend,” Kunle Ezun, an analyst at Ecobank Transnational Inc in Lagos, said by phone. 

“It is to encourage banks to move funds to areas the central bank wants to drive growth”, told Bloomberg.

Banks are reluctant to lend with the economy struggling to recover from a 2016 contraction, double-digit inflation and the lure of buying government bonds that pay average yields of 14.2 per cent

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