In a directive to banks signed by Bello Hassan, Director of Banking Supervision CBN “All deposit money banks are hereby informed that effective September 1, 2020, interest on local currency savings deposit shall be negotiated subject to a minimum of 10 percent of Monetary Policy Rate (MPR)”. This cuts down the savings interest rate from 3.9 percent to 1.25 percent per annum.
While this development is said to stimulate investment by making savings less desirable with low interest rate on loans as an added advantage, it doesn’t change the fact that potential savers may be getting less for their savings at the end of the year. What this means is that, the same deposit in a savings account that earned about 3.9 interest in the previous year will consequently loose more than half of that interest this year. This has a striking effect a long-term saving culture which makes savings less desirous.