The Central Bank of Nigeria (CBN) has made a u-turn by reversing the five percent interest rate on all its intervention facilities to nine percent per annum.
CBN’s Director of Financial Policy and Regulation Department, Chibuzo Efobi said this in a circular signed on Wednesday.
In March 2020, following the outbreak of COVID-19, the apex bank announced measures to reduce the negative impact of the pandemic on businesses and households.
Some of the measures include the reduction of interest rates on the bank’s intervention facilities from nine percent to five percent per annum for one year and granting of a one-year moratorium on all principal payments for its intervention facilities.
A year later, it extended the five percent per annum interest rate on its intervention facilities by 12 months, to expire on Feb 28, 2022.
“In effect, the concessionary interest rate of five percent on our intervention facilities would now be extended until March 1, 2023.”
However, the new CBN circular has returned the interest rate to nine percent before the March 2023 deadline,” the CBN circular, addressed to banks and other financial institutions, reads.
“Further to our circular dated March 15, 2022 (Ref: FPR/DIR/PUB/CIR/001/040) extending the period of interest reduction to all intervention facilities from nine per cent to five per cent per annum (as part of measures to mitigate the negative impact of COVID-19 pandemic on the Nigerian economy), the Central Bank of Nigeria hereby reverts the interest rate on all its intervention facilities to 9 per cent per annum.
“The reversed rates shall be implemented as follows: All intervention facilities granted effective July 20, 2022, shall be at a nine per cent per annum; all existing intervention facilities granted prior to July 2022 shall be at 9 percent per annum effective from September 1, 2022.
“Further enquiries on the provisions of this Circular may be referred to the Director, Development Finance Department.”
The development comes two days after the CBN directed banks to increase the minimum interest rate payable on savings deposits to 4.2 percent — 30 percent of the current 14 percent monetary policy rate (MPR).