The interest rate forbearance granted to individuals and businesses applying for a loan from the Central Bank of Nigeria (CBN) has been extended by the financial regulator – the second time in a row.
Ripples Nigeria previously reported that the CBN reduced its loan interest rate to 5% from 9% after the COVID-19 outbreak in 2020, which affected revenue and liquidity for businesses in Nigeria.
The cut was made to bolster the capital position of the private sector, in a bid to support gross domestic product and prevent the economy from declining due to the COVID-19 shock to global trade.
It was agreed that the reduced interest rate was to return to 9% by March 2021, but it was extended for a year. In a recent circular to banks, seen by Ripples Nigeria on Thursday, dated February 28, 2022, the 5% rate is expected to continue for another year.
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“Following our Circular dated 3rd March 2021 (Ref: FPR/DIR/PUB/CIR/01/001) on the above, the Central Bank of Nigeria (CBN) hereby extends the interest rate from 5% per year on all CBN interventions. facilities for one year. This takes effect retroactively from February 28, 2022.” reads the circular.
This means that banks offering CBN credit facilities to Nigerians have been barred from repaying 9% apex bank loans over the next twelve months. This comes at a time when the non-performing loan (NPL) ratio has fallen from 4.9% reported in December 2021 to 4.84% in February 2022.
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