Henry Umoru – Abuja
THE Senate on Thursday begun probe into the rationale behind the huge difference in deposit and lending interest rates among commercial banks and other financial institutions.
The Senate said the investigation has become imperative because Nigeria’s current lending rate is one of the highest in the world and suffocating the private sector that should grow the economy.
Consequently, the upper legislative chamber mandated its Committees on Finance, Banking, Insurance, and Other Financial Institutions and that of Legislative Compliance to carry out a holistic investigation into the matter.
While the Finance Committee is chaired by Senator Olamilekan Adeola, the Banking, Finance and Other Financial Institutions is headed by Senator Sani Uba, while the Legislative Compliance is led by Senator Adeyemi Oriolowo.
The Committees were given two weeks to carry out the probe and report back to the Senate at plenary.
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The Senate resolution followed a motion titled: “Urgent need to reduce the gap between the lending interest rate and deposit interest rate among commercial banks and other financial institutions.”
The Bill was sponsored by Senator Adeola who noted that “there is a huge divergence between the deposit and lending rates in Nigeria.”
Presenting the motion, he said “the Senate notes that interest rate is the amount of interest due per period, as a proportion of the amount lent, deposited or borrowed (called the principal sum). It is the proportion of an amount loaned which a lender charges as interest to the borrower, normally expressed as an annual percentage.
“The Senate further notes that there is a huge divergence between the deposit and lending rates in Nigeria. According to data from the Central Bank of Nigeria, savings deposit rate as at December 2019 was 3.89 percent while the prime and maximum lending rates were 14.99 percent and 30.72 percent in the same period;
“Worried that Nigeria’s current lending rate is one of the highest in the world. While the prime lending rate according to the Central Bank of Nigeria Monetary Policy Rate (MPR) is 14.99 percent, loans are available in the commercial banks and other banks at an interest rate of between 22 and 27 percent.
“The Senate is also worried that Nigeria’s inflation rate has risen to 11.98 percent as at December 2019. This is the highest inflation rate between January and December 2019.”