The Nigerian Senate has mandated its Committee on Banking, Insurance and other Financial Institutions to investigate the rationale behind the huge difference between deposit and lending interest rates as obtained among commercial banks and other financial institutions.
This was sequel to a motion titled, “Urgent need to reduce the gap between lending interest rate and deposit interest rate among commercial banks and other financial institutions” sponsored by Senator Solomon Adeola.
Senator said that “there is a huge divergence between the deposit and lending rates in Nigeria.”
According to data from the Central Bank of Nigeria, “savings deposit rate as at December 2019 was 3.89 percent while the prime and maximum lending rate were 14.99 percent and 30.72 percent in the same period”.
Adeola maintained that Nigeria’s current lending rate is one of the highest in the world.
He explaining that while the prime lending rate, according to the CBN monetary policy rate, is 14.99 percent, loans are available in commercial banks and others at an interest rate of between 22 and 27 percent.
He also lamented that the country’s inflation rate has risen to 11.98 percent as at December 2019, adding that it is the highest inflation rate between January and December 2019.
“Latest data from the National Bureau of Statistics also shows that the inflation rate further rose from 11.98 percent in December 2019 to 12.13 percent in January 2020.This development negatively affects the deposit of bank customers in addition to the low interest rate on deposits,” he added.
Contributing, Senator Barau Jibrin, described the practice as deliberate attempt to shortchange the citizens, saying that 24 to 30 rates are not only the highest in Africa, but a rip-off.
“There’s no way economy can grow under such situation. How can investors come into the country huge lending rate when no investors can do without bank loans,” he declared.
He said the CBN as the country’s apex bank should be summoned and call to order over bank’s policies that are anti-people.
The Senate President, after adopting the resolution, gave the committees two weeks to report to the plenary.