Home Local CBN slashes interest rate on intervention loans to 5%
CBN slashes interest rate on intervention loans to 5%

CBN slashes interest rate on intervention loans to 5%

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As nations across the world scramble to manage the spread and scathing effects of the COVID-19 virus, the Central Bank of Nigeria (CBN) Governor, Mr Godwin Emefiele on Monday announced  a cut in rate in intervention loans to enable Nigerian businesses cope with the effect of the disease. 

Top on the list is the reduction on interest rate on its N3 trillion multi-sector intervention packages from 9 per cent to 5 per cent.

The apex bank also extended its moratorium on various loans for one year, effective March 1, 2020, to guarantee easier repayment plan since the revenue of most businesses has drastically reduced as a result of the coronavirus pandemic.

Accordingly, it directed participating financial institutions to provide new amortization schedules for all beneficiaries.

Speaking at a media briefing to announce the palliatives, Emefiele regretted that the pandemic remains a major economic threat capable of causing global recession, noting that providing various strategies to cushion the effect was vital.

He said: “The CBN hereby establishes a N50 billion 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”.

Emefiele added that due to the potential increase in demand for Healthcare services and products, the CBN has opened fresh intervention facilities like loans to Pharmaceutical companies intending to expand/open their drug manufacturing plants in Nigeria; as well as to hospital and healthcare practitioners who intend to expand/build the health facilities to first class centres.

“This is in addition to growing the size of existing interventions to the agricultural and manufacturing sectors in Nigeria.

“The CBN hereby grants all Deposit Money Banks leave to consider temporary and time-limited restructuring of the tenor and loan terms for businesses and households most affected by the outbreak of Covid-19 particularly oil & gas, agriculture, and manufacturing. The CBN would work closely with DMBs to ensure that the use of this forbearance is targeted, transparent and temporary, whilst maintaining individual DMB’s financial strength and overall financial stability of the system.

“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 encouraged to continue to build capital buffers in order to improve resilience of us over N2 trillion in the last seven months.

“The bank stands ready to provide liquidity backstops as and when required in view of its role as banker to the Federal Government and lender of last resort. The CBN shall continue to monitor developments and will issue further updates as may be appropriate”, he stated.

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