FIVE AREAS THAT THE NEW CENTRAL BANK OF NIGERIA (CBN) RULE ON SAVINGS DEPOSITS COULD BUZZ YOUR WALLET

The Central Bank of Nigeria recently issued a monetary policy on interest rates on Business Savings Accounts held in Nigeria Deposit Banks. The Policy effectively reduces interest rates earned on money saved in Nigerian Banks from 3.75% p.a. to 1.75% p.a. from September 1, 2020. But what does this mean to your wallets?

1.  It is a no-brainer that the new CBN policy is geared towards stimulating investment in the real sectors of the economy, in order to foster economic growth and development. What this means in simple terms is that the era of leaving huge funds in bank vaults is simple over! As at the last count over 37 trillion Nigerian Nigeria is sitting idle in Nigerian banks! Going forward, you will practically earn nothing from leaving your funds in a deposit Savings Account with Inflation currently above 12%.

2. The CBN hopes to stimulate private sector participation in the Nigerian economy especially in the areas of Import Substitution – a term that simply means that Nigerians should begin to produce in-Country what they have been importing.

3. On the part of the deposit banks, the CBN hopes to further enhance real sector lending. Small and medium enterprises can begin to come up with bankable blueprints for locally productive activities while the banks will have more money to finance these activities since the CBN will now lend to them at 10% instead of the prevailing 12.5%.

4. Increased economic activities always lead to increased employment and earning opportunities, Therefore, if you have been in the labour market, this is one policy that might change your fortunes and see you becoming gainfully employed as most real sector activities are labour intensive.

5. Finally the policy should – all things being equal, see more Naira flow into circulation as economic activities begin to engage the hitherto idle funds that have been earning interest sitting pretty in banks vaults. So it is time to horn your skills and sharpen your earning power so that your wallets  will become more buzzed-up from increased earnings.