Economy
CBN cuts interest rate on savings deposits
The Central Bank of Nigeria (CBN) has slashed the interest rate payable on monies held in savings accounts to around 1.25% per annum from the previous benchmark of around 3.75 per annum.
The rate cute is effective from September 1, 2020, according to a circular to all banks from the regulator.
With the development, analysts expect a mass exodus of funds idling in savings deposit accounts into money market instruments, which currently gives returns of around 3-5% per annum, as well as the real sector.
“This is a game-changer. This makes keeping monies in savings deposit less attractive to depositors,” a senior banker said.
Analysts say the move will allow smaller banks to grow faster and also make it easier for banks to cut lending rates to borrowers.
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