By Uthman Salami
The interest rate forbearance given to individuals and businesses seeking loan from the Central Bank of Nigeria (CBN) has been extended by the financial regulator — the second time in a row.
It had previously been reported that the CBN had cut its loan interest rate down to 5per cent from 9per cent after COVID-19 outbreak in 2020, which affected the earnings and liquidity of businesses in Nigeria.
The reduction was made to boost the capital position of the private sector, in a bid to support the gross domestic product, and prevent the economy from a decline due to COVID-19 shock to global trade.
It was gathered that the reduced interest rate was meant to return to 9per cent by March 2021, but it was extended for another year. In a recent circular to banks, on Thursday, dated February 28, 2022, the 5per cent rate is expected to continue for one more year.
The reduction was made to boost the capital position of the private sector, in a bid to support the gross domestic product, and prevent the economy from a decline due to COVID-19 shock to global trade.
It was gathered that the reduced interest rate was meant to return to 9per cent by March 2021, but it was extended for another year. In a recent circular to banks, on Thursday, dated February 28, 2022, the 5per cent rate is expected to continue for one more year.
“Further to our circular dated March 3, 2021 (Ref: FPR/DIR/PUB/CIR/01/001) on the above, the Central Bank of Nigeria (CBN) hereby extends the 5per cent per annum interest rate on all CBN intervention facilities for one year. This takes effect retrospectively from the 28th of February 2022,” the circular reads.
This means banks offering CBN credit facilities to Nigerians have been prevented from servicing the apex bank loans by 9per cent in the next twelve months. This comes at a time Non-Performing Loans ratio (NPLs) dropped from 4.9per cent reported in December 2021, to 4.84per cent in February 2022.