CBN bars interest payments on bank deposits above N2bn

The Central Bank of Nigeria (CBN) said lenders will no longer receive interest payments on deposits exceeding N2 billion ($5.5 million).

The CBN said in statement posted on its website on Wednesday: “Any deposit by a bank in excess of 2 billion naira shall not be remunerated.”

The statement by the apex bank said CBN will pay interest to lenders on qualified deposits at a rate determined by the Monetary Policy Committee (MPC).

It would be recalled that the CBN last week told banks to increase their loan-to-deposit ratio to at least 60 per cent by September or face penalty as it seeks to boost loans to the real sector and bolster growth.

“The rule is geared at making banks lend the money since it won’t be remunerated,” Kunle Ezun, analyst at Ecobank Transnational Inc in Lagos.

“It is to encourage banks to move funds to areas central bank wants to drive growth.” He told Bloomberg in a telephone interview n Wednesday.