Nigeria Bars Interest Payments on Bank Deposits Above $5.5 Million - BLOOMBERG
By Emele Onu
The headquarters of the Nigerian central bank stands in Abuja, Nigeria.
Photographer: George Osodi
The Central Bank of Nigeria said lenders will no longer receive interest payments on deposits exceeding 2 billion naira ($5.5 million).
“Any deposit by a bank in excess of 2 billion naira shall not be remunerated,” the central bank said in statement posted on its website on Wednesday. The central bank will pay interest to lenders on qualified deposits at a rate determined by the monetary policy committee, it said.
The Abuja-based central bank ordered banks last week to increase their loan-to-deposit ratio to at least 60% by September or face penalty as it seeks to boost loans to the real sector and bolster growth.
“The rule is geared at making banks lend the money since it won’t be remunerated,” Kunle Ezun, analyst at Ecobank Transnational Inc in Lagos, said by phone. “It is to encourage banks to move funds to areas central bank wants to drive growth.”
(Adds analyst comment in final paragraph.)