CBN drops savings account interest rate to 1.25%

Money Banks to review interest rates on savings accounts to a minimum of 10 per cent of the Monetary Policy Rate eﬀective from September 1, 2020.

This would amount to 1.25 per cent at the current MPR of 12.5 per cent.

It disclosed this in a circular with the number, BSD/DIR/GEN/LAB/13/051 to all banks which was obtained on Monday. The circular was titled ‘Re: Interest rate on savings deposit’.

At the last Monetary Policy Committee meeting in July, the apex bank had retained the MPR at 12.5 per cent.
The CBN’s letter to the banks read, “The Central Bank of Nigeria has noted with satisfaction declining trend in market rates in the banking sector following the implementation of policies aimed among 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.

“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”

In an earlier circular number FPR/DIR/GEN/CIR/07/042 entitled, “Re: Charges to all banks, other ﬁnancial and non-bank ﬁnancial institutions,” issued in December 20, 2019, the CBN reviewed bank charges to align with market developments.

Section 1 on interest on deposits on savings accounts stipulated, “Minimum of 30 per cent of MPR p.a (Not payable if a customer makes more than four withdrawals in a month).

FG raises agric credit scheme fund to N50bn.

The Federal Government has raised the share capital of the Agricultural Credit Guarantee Scheme to N50bn from N3bn.

The Central Bank of Nigeria disclosed this in a document on Monday entitled ‘Agricultural Credit Guarantee Scheme Fund (Amendment) Act 2019.’

It stated that the ACGSF Amendment Act was assented to by the Federal Government on June 24, 2019.
According to the document, complete agricultural value chain ﬁnancing is now allowed under the ACGSF Amendment Act 2019.

The CBN said, “Under the Agricultural Credit Guarantee Scheme Amendment Act 2019, the sharing ratio is Federal Ministry of Finance (60): Central Bank of Nigeria (40).

“The maximum for non-collaterised loan under the ACGSF Amendment Act 2019 is now N100,000. Under the amended Act, the maximum amount for collaterised loan granted to individuals, cooperative societies and corporate entities is now N50m, up from N10m.

“Complete agricultural value chain ﬁnancing is now allowed under the Agricultural Credit Guarantee Scheme Amendment Act 2019.

“The ACGSF Amendment Act 2019 now also includes the ﬁnancing of production farm machinery, the implementation and equipment for production, processing, storage and transportation.”

The Act aimed to amend the ACGSF fund Act Cap. A11 laws of the federation of Nigeria, 2004, to enhance the capital base, expand the coverage of the scheme, increase the size of the loan able fund, increase membership and give more powers to the board and for related matters.