The Central Bank of Nigeria (CBN) has explained that the reduction of interest rates on all applicable apex bank’s intervention facilities have from 9% to 5% was part of some policy measures to help reduce the effect of COVID-19 on businesses and families as the effect of the virus continues to pose a serious challenge to the global economy.
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CBN governor, Mr. Godwin Emefiele, had at a press briefing on Monday disclosed that the interest rates on all applicable apex bank’s intervention facilities have been reduced from 9% to 5% per annum for 1 year effective March 1, 2020.
The apex bank has also granted all deposit money banks (DMB) leave to consider temporary and time-limited restructuring of the tenor and loan terms for businesses and households most affected by the outbreak of Covid-19 particularly oil & gas, agriculture, and manufacturing.
Some of the other policy measures include the provision of N50 billion credit facility for households and small and medium scale enterprises (SMEs), the extension of the moratorium before payment of principal on its intervention funds by one year.
A moratorium is the delay period which is given before the payment of a loan.
The N50 billion targeted credit facility is going to be disbursed through NIRSAL Microfinance Bank for households and SMEs that have been particularly hard hit by the coronavirus disease including but not limited to airline service providers, healthcare merchants, hoteliers and so on.
In addition, CBN will provide credit support to the health industry in the form of loans to hospitals, health care practitioners and pharmaceutical companies.
Emefiele said, “The CBN would work closely with DMBs to ensure that the use of this forbearance is targeted, transparent and temporary, whilst maintaining individual DMB’s financial strength and overall financial stability of the system.”
It will also extend intervention facilities and loans to pharmaceutical companies intending to expand/open their drug manufacturing plants in Nigeria, as well as to hospital and healthcare practitioners who intend to expand/build the health facilities to first-class centres.
The apex bank is to also strengthen and sustain its loan to deposit ratio (LDR) policy in view of the success of the policy in growing credit to the economy and reducing interest rates.