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Banks Reward Savings Accounts With 1.28%, Lending Hits 26.61%

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A figure released by the Central Bank of Nigeria has shown that the gap between the savings and lending rates in the banking sector widened by 25.33 percent in March.

It was disclosed that the savings deposit rate stands at 1.28 per cent in March while the maximum lending rate stands at 26.61 per cent.

According to the figure released by the apex bank, the savings rate in February was 1.28 per cent while the lending rate was 26.61 per cent.

While in January, the saving rate stood at 1.25 per cent while the lending rate was 30.73 per cent.

Experts claimed that the rates introduced in the market by the banking regulator would discourage people from saving and encourage those with the funds to look for other investments that would yield better returns.

The experts lamented that the lending rate is too high for entrepreneurs to do business and could hinder them from making profits, asides from other hostile economic challenges.

A former President, of the Association of National Accountants of Nigeria, Dr Sam Nzekwe while speaking on the savings and lending rate noted that the CBN dropped the rates of savings, including fixed deposit rate because it was trying to discourage people from saving their money but to invest them.

He said, “They were trying to do it so that people will not be saving. Instead of saving, the government wants them to act on something that could generate income.

“So, when they have done that, people are no more interested to save except for people who have so much excess cash that they just want to save. Otherwise, most people are not saving again because the rate by which interest is calculated is very low.”

He said with an inflation rate of 16.82 per cent as of April, if a person was getting returns as low as 1.28 per cent on savings, the gap was going to be too wide and there would be saver losses.

Sam Nzekwe said, “Why do you now have to keep saving in naira and be suffering inflation at 16.82 per cent? You will see that there is no encouragement whatsoever to be saving money again.

“Some people now have resorted to buying land and properties instead of keeping the money in the bank because it is not going to yield anything.”

He also observed that due to the high unemployment rate, many people had no job or income and had nothing to save.

Many who were working, he said, had little income, which had already been affected by inflation and huge expenses.

“The salary is not enough, so you don’t have any money to keep.”