Coronavirus: CBN slashes interest rate on N3trn intervention fund to 5%

…directs banks to review loan terms

Following the widespread of Coronavirus and its implication on the nation’s economy, the Central Bank of Nigeria (CBN) on Monday reduced interest rate on N3trillion intervention fund to a single digit.

The CBN Governor, Mr Godwin Emefiele, announced the measures during a media briefing at the apex bank headquarters in Abuja.

The CBN governor noted that effective March 1, the apex bank had granted a one-year respite on all of its intervention funds.

The CBN through the banks provided a total of N3trillion to Small and Medium Enterprises in the economy.

The apex bank governor also said the CBN would provide credit support for the health care industry to meet the potential increase in demand for health care services.

The director, financial policy and regulation of CBN, Kevin Amugo in a circular on Monday said the apex bank has created policies in response to the untold hardship caused by the Covid-19 pandemic.

In a statement circulated to all Deposit Money Banks (DMBs), the director revealed that the response measures became necessary in order to provide support for households, businesses, regulated financial institutions and other stakeholders in order to cushion the adverse economic impact of the pandemic.

According to him, “The new policies created are to be effective from March 1, 2020, and they are; extension of the moratorium with an additional period of one year and new amortization schedules for all beneficiaries, reduction of CBN intervention facilities interest rates from nine to five per cent per annum, the establishment of new facilities in partnership with NISRAL microfinance bank for households, SMEs, hoteliers, airline service providers who were hard guy by the pandemic, credit support for healthcare industry to meet the potential increase in the demand for healthcare services and products.

“The CBN hereby grants all DMBs leave to consider temporary and time-limited restructuring of the tenor and loan terms for businesses and households most affected by Covid-19 particularly oil & gas, agriculture and manufacturing.”

He explained further that, “The CBN would rather support industry funding levels to maintain DMBs are encouraged to continue to build capital buffers in order to improve resilience of the sector”, the statement reads.

The apex bank also assured the DMBs of its readiness to provide liquidity backstops as and when required in view of its role as Banker to the Federal Government as tender of last resort while it monitors developments and will issue further updates as maybe appropriate.

Recall that the Covid-19 pandemic already led to unprecedented disruptions in global supply chain, sharp reduction in crude oil prices, turmoil in global stock and financial markets, massive cancellation of sports activities, entertainment and business events, to mention a few.