- Coronavirus: CBN Lowers Interest Rates on Intervention Facilities to 5%
In an effort to stimulate growths and support economic activities amid raging coronavirus, the Central Bank of Nigeria (CBN) has deployed financial measures to sustain business activities, job creation and price stability.
In the circular issued to Deposit Money Banks (DMBs) on Monday, the apex bank said in furtherance of its financial stability mandate to provide support for businesses, households, stakeholders and regulate financial institutions, it has put together six measures to stabilize economic activity at a period of high uncertainty.
The Central Bank of Nigeria (CBN) announced it has lowered interest rates on all applicable CBN intervention facilities from 9 percent to 5 percent per annum effective from March 1, 2020. All DMBs are notified to effect the change immediately in accordance with the circular.
The CBN said: “Interest rates on all applicable CBN intervention facilities are hereby reduced from 9 percent to 5 percent per annum for 1 year effective March 1, 2020.”
The central bank also announced the creation of a N50 billion targeted credit facility to support households and small and medium-sized enterprises that have been affected by the coronavirus outbreak.
“The CBN hereby establishes a facility through the NIRSAL Microfinance Bank for households and small- and medium-sized enterprises (SMEs) that have been particularly hard hit by Covid-19, including but not limited to hoteliers, airline service providers, health care merchants, etc.”
Credit support was established for the healthcare sector to meet the potential increase in demand for healthcare services and products during the ongoing coronavirus outbreak. The apex bank explained that this is in addition to growing the size of existing interventions to the agricultural and manufacturing sectors in the country.
Also, the CBN granted all DMBs leave to consider temporary and time-limited restructuring of the tenor and loan terms for businesses and households that are most affected by the coronavirus outbreak, particularly in the oil and gas, manufacturing and agricultural sectors.
The apex bank added that “in view of the success of the LDR Policy in growing credit to the economy and reducing interest rates, the CBN would further support industry funding levels to maintain DMBs’ capacity to direct credit to individuals, households, and businesses. We will also consider additional incentives to encourage extension of longer tenured credit facilities. DMBs are encourage to continue to build capital buffers in order to improve resilience of the sector.”