CBN reduces special interest rate from 9% to 5%
By Peter Usman
Central Bank of Nigeria (CBN) has revealed that the interest rates on all applicable apex bank’s intervention facilities have been reduced from 9% to 5% per annum for 1-year, effective March 1, 2020.
This disclosure was made by the CBN Governor, Godwin Emefiele during a press briefing in Abuja.
The apex regulator at the event presented some policy measures to help reduce the effect of COVID-19 popularly referred to as coronavirus on businesses and families as the effect of virus poses a serious challenge on the global economy.
According to Emefiele,”Interest rates on all applicable CBN intervention facilities are hereby reduced from 9% to 5% per annum for 1-year effective March 1, 2020.
Some of the other policy measures put in place by CBN include the provision of N50 billion credit facility for households and small and medium scale enterprises (SMEs), the extension of the moratorium before payment of principal on its intervention funds by one year.
N50 billion targeted credit facility is going to be disbursed through NIRSAL Microfinance Bank for households and SMEs that have been particularly hard hit by the coronavirus disease including but not limited to airline service providers, healthcare merchants, hoteliers among others.
In addition, CBN will provide credit support to the health industry in the form of loans to hospitals, health care practitioners and pharmaceutical companies.
Meanwhile, the apex bank also grants all deposit money banks (DMB) leave to consider temporary and time-limited restructuring of the tenor and loan terms for businesses and households most affected by the outbreak of Covid-19 particularly oil & gas, agriculture, and manufacturing.
Emefiele stated that the CBN would work closely with DMBs to ensure that the use of this forbearance is targeted, transparent and temporary, whilst maintaining individual DMB’s financial strength and overall financial stability of the system.
It will also extend intervention facilities and loans to pharmaceutical companies intending to expand/open their drug manufacturing plants in Nigeria, as well as to hospital and healthcare practitioners who intend to expand/build the health facilities to first-class centres.
The apex bank is to also strengthen and sustain its Loan to Deposit Ratio (LDR) policy in view of the success of the policy in growing credit to the economy and reducing interest rates. The CBN intends to offer more support to industry funding levels in order to maintain DMS’s capacity to give credit to individuals, households and businesses.
The CBN said they will always monitor developments and will issue further updates when required.