Barely a week after the Central Bank of Nigeria (CBN) hiked the Monetary Policy Rate (MPR), Nigerian banks are expected to increase their interest rates on loans starting this week.
The MPR is the interest rate set by the CBN upon which all other rates, especially lending rates, in the financial market are based, with significant markups.
Last Tuesday, the apex bank increased the benchmark MPR from 14 percent to 15.5 percent, the third time in four months, in its quest to tame inflation.
A senior bank executive who spoke to Vanguard Money Digest on condition of anonymity said there was nothing holding the banks from increasing their lending rates immediately as the CBN has already started applying the new rate.
According to him most banks, including his own bank, will start sending out letters to their borrowing customers this week advising them of the new rates.
He declined to give the specific rates the banks are likely to charge as he explained that the rates will differ among banks and according to the different credit categories.
He also declined to indicate the deposit rates that would apply in line with the new rate regime.
hen they see that they will not be able to meet up with paying the principal on time.
“If I have money now, I will put it in the bank because I don’t know what else I will do rather than save money and make 30 per cent of MPR.
“Even the banks were not paying the 10 per cent of MPR. So how am I sure they are going to pay the 30 per cent of MPR if I have N1 million in my account?
“In fact, most banks don’t encourage you to save in your savings account; they prefer you credit your current account. That is the problem.
“If they are sure that the banks will implement it, then some bank customers who have surplus money lying here and there will save it in the banks and make 30 per cent interest of MPR on it.”
