Senate probes CBN, Banks over 30 percent lending rate

The Central Bank of Nigeria (CBN) and commercial banks in the country came under fire yesterday over disparities in deposit and lending rates obtainable in their offices. The upper legislative chamber lamented that interest rate on loans operated by commercial banks and approved by the CBN remained one of the highest in the world.

Angered by the development, the Senate mandated its Committee on Financial Institutions to investigate and report back its findings to enable it take a definite position on the matter. These revelations were made during the consideration and adoption of a motion titled: “Urgent need to bridge the gap between lending interest rate and deposit interest rate among commercial banks and other financial institutions” sponsored by Solomon Adeola Olamilekan.

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According to data from the Central Bank of Nigeria, savings deposit rate as at December 2019 was 3.89 per cent, while prime and maximum lending rates were 14.99 per cent and 30.72 per cent in the same period. “Nigeria’s current lending rate is one of the highest in the world. While the prime lending rate according to the Central Bank of Nigeria Monetary Policy Rate (MPR) is 14.99 per cent, loans are available at the commercial banks and other banks at an interest rate of between 22 and 27 per cent.

Nigeria’s inflation rate rose to 11.98 per cent as at December 2019. This is the inflation rate between January and December 2019. Latest data from the National Bureau of Statistics show that the inflation rate further rose from 11.98 per cent in December 2019 to 12.13 per cent in 2020. This development negatively affects the deposits of commercial bank customers in addition to the low interest rates on deposits,” said Olamilekan.

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