In a statement on Sunday, Bola Tinubu stated that reducing the rates will encourage domestic investment and production, create jobs and wealth.
He, however, admitted that lower rates will have some negative short-term impact on inflation and the exchange rate.
According to the APC leader, the central banks of all major economies are lending vast amounts at low rates just to support their industries and firms.
Tinubu said: "My position has always been one of reticence to foreign-denominated debt due to repayment challenges. However, if we need foreign currency to buy items essential to protecting the nation from the coronavirus now is the time to borrow.
"The World Bank and other DFIs have said they will grant loans at concessionary rates. We should hold them to their word and demand a renegotiation of existing loans or debt relief.
"While we are not yet inundated with the medical fallout of corona, we too suffer gravely from the economic and financial effects of the contagion. The rest of the world understands the imperative of lower interest rates. We should not pretend to be blind to that which every other major nation sees.
"If this crisis is to have any positive economic aspect, let it be that we used this moment to drive down interest rates. To apply the rate reduction only to future loans would be prejudicial to current bank debtors.
"Thus, the financial authorities should consider formulating regulations that banks must reduce the high interest rates on existing business loans to the new lower general rate. This can be achieved through regulations requiring banks to automatically roll-over existing loans at the lower rate or regulations stating this must be done if the borrower so requests.
"Any such change will alter the profit structure of most banks. To help moderate the change, the government should provide generous tax relief to the banks."
The former Lagos State Governor urged the federal government to institute a special bond-purchasing program where banks can purchase interest-bearing government bonds at a significant discount or even on credit for a period of years.
"The central bank should give banks liberal access to its discount window in order to participate in such programs. These programs are intended to be transitional and thus will sunset in 3-5 years," Tinubu said.
"During the transitional period, banks will have time to alter their lending practices. They must begin to earn profits from higher volumes of business and consumer lending at much lower profit margins per loan.
"In this way, our banking system will finally advance into the modern banking practices that have served as the linchpins for growth in any prosperous nation one can name."
Source: Naija News