Commercial banks in the country have devised new ways of making money from depositors fund following the cut in charges being made by banks by the Central Bank of Nigeria (CBN).
It was gathered that many of the banks have widened the gap between lending rates and interests.
Now, interest on savings and fixed deposits was as low as 1.25 per cent while lending rates were as high as 25 per cent. Also, yields on treasury bills in the secondary market have fallen to between 2.5 per cent and 4.9 per cent. About a year ago, the yield on these securities could be as high as 12 per cent.
With this development, the banks have created a way to make money for themselves. This means the banks are collecting the money of their customers, offering this capital to borrowers in high lending rates to make more money for the bank from the customers’ deposit but the interest rates on the savings are rather too low or insignificant.
So basically, customers are not getting value from their savings while banks are gaining much more from the savings. According to a report, a mixture movement was recorded in banks deposit rates but lending rates trended upwards in November 2019.
Also, lending rate and collateral have also led to the exclusion of most small and medium businesses despite having their savings at the banks. Small businesses are not enjoying the support of banks while the large corporations are mostly favoured for bank loans.
“The only way we can continue to make income was from interests because e-based income had dwindled and could not support operations. Now, institutions were paying very low interest on savings accounts and charging more on loans,” a source disclosed.
Also, the Rector, Institute of Credit Administration, Prof Chris Onalo, said banks were in cohorts to cripple the economy. He condemned the gap between lending and savings rates.
“I think it is a selective thing because I don’t think they can do it to the giants in the economy.”
Recall that the third withdrawal from ATM within the same month had been reduced to N35, from N65 earlier charged. Card maintenance fee was also reviewed to N50 every three months (quarterly), from the initial monthly period. The guide released by the CBN contains major changes in electronic transactions’ charges in Nigeria.