The new Governor of the Central Bank of Nigeria, Mr. Godwin Emefiele, has scrapped charges on cash deposits, just as he promised a gradual reduction in the interest rates on lending.
He said a zero charge on deposits would encourage investment attitudes among the savers, while a reduction in the lending rates would make credit cheaper for potential investors.
Emefiele, while unveiling his blueprint for the banking sector and the economy, said his vision for the country was to create a central bank that would be professional, apolitical and people-focused.
He spoke to journalists at the CBN head office in Abuja and noted that the two initiatives of achieving a reduced interest rate and deposit charges were part of his 10-point agenda for the central bank.
The CBN boss said, “We shall pursue a gradual reduction in interest rates. A comparison of selected macroeconomic aggregates from some emerging market countries including South Africa, Brazil, India, China, Turkey, and Malaysia indicates that Nigeria has one of the highest Treasury bill rates.
“Such high rates create a perverse incentive for commercial banks to simply buy virtually risk-free government bonds rather than lend to the real sector.”
He noted that while the task of reducing the interest rate and maintaining the exchange rate were very daunting twin goals, the CBN would work assiduously with all stakeholders to device countervailing measures that would ensure that the goals were mutually achieved.
“To enhance financial access and reduced borrower cost of credit, we would pursue policies targeted at making Nigeria’s treasury bill rates more comparable with other emerging markets and by extension, pursue a reduction in both deposit and lending rates,” said the CBN governor.
Speaking on the country’s payment system, Emefiele said his vision was to align with the policy of his predecessor on the cash-less policy, noting that the policy would go nationwide on July 1 this year as earlier scheduled.
He, however, regretted that during the course of the pilot scheme, a lot of complaints were made by customers, particularly regarding the charges being imposed for cash deposits.
This, according to him, has resulted in customers devicing various means to avoid the charges such as opening of multiple accounts and other disingenuous behaviours with the aim of undermining the objectives of the policy.
Given these outcomes and in order to better reflect his goal of having more cash under the control of the CBN, Emefiele said, “All charges on deposits are hereby stopped with immediate effect. Charges on withdrawals, in view of their eventual elimination, remain sustained at the current three per cent for individual transactions exceeding N500,000 and five per cent for corporate transactions exceeding N3m.
“Currently, these fees go entirely to the commercial banks. However, going forward, the central bank shall determine what percentage of these fees on excess drawings that will be redeemed by the bank while the rest shall be remitted to the CBN.”