CBN Raises Interest on Savings As Inflation Reduces the Value of Banks Customers’ Naira Deposit

CBN Raises Interest on Savings As Inflation Reduces the Value of Banks Customers’ Naira Deposit

  • The Central Bank of Nigeria has raised the interest rate on bank customers' deposits
  • This comes on the heels of the National Bureau of Statistics' latest inflation numbers, which shows a 17-year high
  • Nigeria's growing inflation has further eroded the value of the country's savings in bank accounts

Following the country's growing inflation, which is diminishing the value of savings, the Central Bank of Nigeria (CBN) has increased the minimum interest rate payable on savings accounts.

According to the CBN, bank customers will be getting at least 4.2 per cent on their savings compared to the previous 0.15- 1.4 per cent.

The new interest rate on savings was contained in a circular seen by dated August 15, 2022.

CBN increases banks customers deposits
Godwin Emefiele, CBN Governor Photo by next24online/NurPhoto via Getty Images
Source: Getty Images

The circular is titled Review Of Interest Rate On Savings Deposits and signed by Haruna B. Mustafa, Director of Banking Supervision.

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The increase in savings interest rates, effective August 1, was taken in light of the return to total normality after considering current macroeconomic conditions, according to the apex bank.

Content of CBN interest rate savings circular

The circular 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% 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 apex bank also noted that Nigeria's economy returning to normalcy is one of the reasons why the savings interest rate was increased, BusinessDay reports.

CBN said:

"The economy has regained its previous level of normality; in light of this recovery and the current macroeconomic environment, it has become essential to implement an upward adjustment of the interest rate payable on local currency savings accounts."

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"Accordingly, the negotiated minimum interest rate on local currency savings deposits should be 30% of MPR as of August 1, 2022. This replaces our letter on the issue dated BSD/DIR/GEN/LAB/13/052 as of September 1, 2020."

Five easy steps to check fake Bank alerts

Recall reported that in recent years, there has been a huge spike in the number of fraudulent cases, and this has become a source of concern for the Central Bank of Nigeria.

In an industry fraud report by the Nigeria Inter-Bank Settlement System Plc (NIBSS), it was detailed that in a nine-month period, fraudsters attempted attacks 46,126 times, and they were successful on 41,979 occasions.

This represents a 91% successful rate, amounting to N5.2 billion lost to bank customers.


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