More money for Nigerians as CBN asks banks to pay higher interest on savings

The Central Bank of Nigeria has raised the minimum interest rate on Naira savings deposits from 0.15 percent to 4.2 per cent.

The new directive took effect from August 1, 2022.

The bank in a circular dated August 15, 2022, and signed by Haruna Mustafa, director of the banking supervision department, said the rate has been revised from 10 per cent to 30 per cent of the Monetary Policy Rate (MPR).

In a bid to address inflation, the bank in July raised the benchmark interest rate to 14 per cent from 13 per cent, making it the second consecutive time the central bank would raise the benchmark rate in 2022.

“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,” the CBN said.

“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.

“Accordingly, effective August 1, 2022, the negotiable minimum interest rate on local currency savings deposits shall be 30% of MPR. This supersedes our letter dated BSD/DIR/GEN/LAB/13/052 on the subject. September 1, 2020.”

With this new development, many Nigerians may now have to ditch various fintech firms that reward savings with better interest than the banks.

According to the latest deposit and lending rates in the banking industry published on the CBN website, eight out of 27 banks paid 1.40 per cent savings interest rates.

The banks are Access Bank, Citibank, Ecobank, Globus, Polaris, Stanbic IBTC, Sterling Bank, and Zenith Bank.

Others offered between 0.88 per cent to 4.20 per cent.