By using this site, you agree to the Privacy Policy and Terms of Use.
Accept
Nigerian BankerNigerian Banker
Notification Show More
Latest News
Adeduntan urges banks to improve loan monitoring to prevent NPLs’ build-up
January 12, 2023
Despite difficult times, FirstBank excited families with unique “DecemberIssaVybe” experiences
January 8, 2023
Another set of winners to emerge in the ongoing Polaris Save & Win Promo
January 4, 2023
Why the 2022 edition of DecemberIssaVybe by FirstBank wasn’t just about the excitement but memories
January 4, 2023
Polaris Bank assures Nigerians of seamless transactions this Yuletide
December 27, 2022
Aa
  • Home
  • News
  • Banking Personality
  • Ethical Banking
  • My Bank & I
  • Research & Analysis
  • Opinion
  • My Bookmarks
  • Contact US
Reading: Why CBN raised Local Currency Savings Deposits Interest to 30% of MPR
Share
Aa
Nigerian BankerNigerian Banker
  • Banking Personality
  • Ethical Banking
  • My Bank & I
  • Opinion
  • Research & Analysis
Search
  • Home
  • News
  • Banking Personality
  • Ethical Banking
  • My Bank & I
  • Opinion
  • Research & Analysis
  • Contact
Have an existing account? Sign In
Follow US
© 2022 - Nigerian Banker. All Rights Reserved.
- Advertisement -
Ad image
Nigerian Banker > Blog > News > Why CBN raised Local Currency Savings Deposits Interest to 30% of MPR
Savings Deposits
NewsOpinion

Why CBN raised Local Currency Savings Deposits Interest to 30% of MPR

bankernaija
bankernaija August 17, 2022
Updated 2022/09/27 at 8:18 PM
Share
SHARE

The Central Bank of Nigeria (CBN) has announced the upward review of interest payable on local currency savings deposits from 1.4 percent to 4.2 percent being 30 percent of Monetary Policy Rate (MPR) The rate was at 10 percent of MPR before this currently review.

The upward review of interest on local currency savings deposits was stated in a circular released from the office of the CBN director, Banking Supervision, Haruna Mustafa, and issued to all banks. The circular was dated August 15, 2022.

The review of interest on savings deposit by 200 basic points is to take effect from August 1, 2022 according to the circular issued by the Apex bank and this will subsequently take the interest earned by Banks savings account holder to 4.2 percent per annum from the current earning of 1.4 percent which is 10 percent of MPR.

The circular in part reads: “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 per cent to 10 per cent 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 circular reads.

“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.

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

It will be recalled that at the last meeting of the Monetary Policy Committee (MPC) of the CBN in July 2022, the MPC had raised Monetary Policy Rate (MPR) by 100 points to 14 per cent due to the persistent rise in inflation rate in the country.

Why is CBN raising interest on local currency savings deposits?

It is the prerogative of the CBN as the manager of the Nigerian economic monetary policy to either pursue an expansionary monetary policy or a contractionary monetary policy.

An expansionary monetary policy ensures increase of money in circulation to boost the economy, provide jobs through increased spendings. Lowering interest rates on local currency savings deposits to discourage savings and low MPR to encourage borrowing was deployed by the Apex bank during the economic meltdown occasioned by the COVID-19 lockdowns. That was to ensure that there are more money in the hands of people to spend on goods and services so manufacturer can continue to produce to cater for continuous demand and that manufacturer have access to bank loans at cheaper interest rates to continue to produce so as to cater for demands of consumers

A contractionary monetary policy is the direct opposite of expansionary monetary policy. Policies deployed to reduce spendings and reduce borrowing are meant to ensure contractions in the economy. And such policies are deployed in the time of increasing cost of goods and services or inflation. The recent increase in MPR and recent increase in interest rates on local currency savings deposits are meant to curb increasing inflation rates in the country.

Related

- Advertisement -
TAGGED: CBN, inflation, interest rate, MPR
bankernaija August 17, 2022
Share this Article
Facebook TwitterEmail Print
Leave a comment

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Recent Posts

  • Adeduntan urges banks to improve loan monitoring to prevent NPLs’ build-up
  • Despite difficult times, FirstBank excited families with unique “DecemberIssaVybe” experiences
  • Another set of winners to emerge in the ongoing Polaris Save & Win Promo
  • Why the 2022 edition of DecemberIssaVybe by FirstBank wasn’t just about the excitement but memories
  • Polaris Bank assures Nigerians of seamless transactions this Yuletide

Recent Comments

  1. How Nigerians in Diaspora can obtain BVN and attach it to their Nigerian Bank Account with ease – Nigerian Banker on How BVN can be used to steal money from you Bank Account

You Might Also Like

News

New Naira notes hits circulation today

December 15, 2022
News

CBN suspends charges on cash lodgement following Naira redesign deadlines

December 8, 2022
News

CBN limits cash withdrawal to N100,000 per week effective Jan 2023

December 6, 2022
My Bank & I

Interest Rates, It’s Meaning And How It Is Calculated

November 16, 2022

Categories

  • My Bank & I
  • Banking Personality
  • Ethical Banking
  • Research & Analysis
  • Opinion

About US

Nigerian Banker is focused on being the reference and source for all banking and related information in Nigeria
Quick Link
  • My Bookmark
  • Contact Us
  • News
  • My Bank & I
Top Categories
  • Banking Personality
  • Ethical Banking
  • My Bank & I
  • Opinion
  • Research & Analysis

Subscribe US

Subscribe to our newsletter to get our newest articles instantly!

© Nigerian Banker. 2022. All Rights Reserved.

Removed from reading list

Undo
Welcome Back!

Sign in to your account

Lost your password?