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.
The CBN had cut its loan interest rate down to 5% from 9% 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 9% by March 2021, but it was extended for another year. In a recent circular to banks, seen by Ripples Nigeria on Thursday, dated February 28, 2022, the 5% 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 5% 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 9% in the next twelve months. This comes at a time Non-Performing Loans ratio (NPLs) dropped from 4.9% reported in December 2021, to 4.84% in February 2022.
