Activa:


CBN does not fix the interest rate on fixed deposit for banks. It only sets the MPR and banks take a cue from there.

How do you 'monitor' your fixed deposit accounts?

Were you at the branch or the head office when the news came?

Now to other issues.

Given the current inflation rate of over 9%, the rates you've quoted aren't possible. If those rates happen with the inflation rate like that, the 'savings' side of the income equation will collapse.

If everybody spends his money what do u think to the bank's ability to lend?

Conclusion: the story you've written here appears fake.

It's not fake, thank God today is Monday. Do the needful, visit ur account officer and then u will know it's not a fake news

GudluckIBB:


FD Is not savings, its investment.

invest in a more viable sector like manufacturing, fixed deposits are meant for lazy peeps.Risk Averters.

Activa:


CBN does not fix the interest rate on fixed deposit for banks. It only sets the MPR and banks take a cue from there.

How do you 'monitor' your fixed deposit accounts?

Were you at the branch or the head office when the news came?

Now to other issues.

Given the current inflation rate of over 9%, the rates you've quoted aren't possible. If those rates happen with the inflation rate like that, the 'savings' side of the income equation will collapse.

If everybody spends his money what do u think to the bank's ability to lend?

Conclusion: the story you've written here appears fake.

Rather than make such a lazy conclusion, I'd suggest you kindly stood up and visit a bank close to you.
The O.P is right and I almost thought we visited the same financial institution.
The rates are crashing due to the Government's desire to free up cash in the economy as a fall out of the Billions returned to banks via the Cash Reserve Ratio drop recently(which has are bank very liquid nd thus Wouldn't need much funds from the public for now except there are clear investable options for them apart from keeping it in the CBn's vaults).
Similarly the Treasury bills rates would fall due to Government's sudden liquid arising from the TSA implementation which has seen it rake in about 1.3trillion.

The implications on the economy may be harsh as it would drive inflation rates up, but a counter notice of reduction in lending rates by 1 to 2 basis points as circulated by some banks late last week may also reduce the cost of borrowing and any inflationary tendencies hat may sprout.

Though Nigeria has always defied any economic theories but these basic issues if handled carefully may force investment and real sector growth.

Activa:


There's really nothing here to confirm.

The news is fake.

Stop misleading people the news is so so real and all banks are changing rates downward....pleaseee visit a bank.
The sterling staff has just shown how serious a banker he is?

Bj5all:


It's not fake, thank God today is Monday. Do the needful, visit ur account officer and then u will know it's not a fake news

The MPR is being reduced by some base points and yes cbn did send out the guideline late last week.

However, FD rates are individually set by banks and if the MPR rate is marginal then expect no significant price movement in the rates.

I'm still getting around 11% for 15+ investment today

braine:
This needs some clarificatclarificationss o. Coz I don't understand.

He is right a friend from First bank told me the same thing last night

This is good news as governors receive bailout fund and fixed the money

Interest rates on fixed deposit accounts are not usually fixed. A bank like First Bank does not accept 100k, they start with 500k unless you try First Microfinance Bank. So, OP be specific about the bank you visited.

USAutoBuy:


Beg to disagree. A high deposit rate translates to high borrowing rates for the business people. If banks are paying 15% for example, they will have to lend out at about 20% so that they can cover cost and make money.

When this policy goes across the board, depositors have no choice and will fall in line. And if you still think your money is safer under your mattress, by all means go right ahead

You will find out soon

Evidence has shown that in Nigeria, there is wide interest rate spread, the difference btw lending rate and deposit rate. Thus, it would appear as if there is little or no relationship between both.

With the decrease in deposit rate, people will be discouraged from keeping their money in fixed deposits. Unless banks will raise ordinary Savings Account interest rate, which seems unlikely, people will be discouraged from saving. This will result in shortage of loanable funds for the bank, just like the effect of TSA policy. If there had been no decrease in CRR, we would have seen lending rate skyrocket cos of shortage of loanable funds. So crashing the deposit rate will have the same effect ceteris paribus.

The only plausible reason why I think the policy makers are pursuing this agenda is that there is already enough stock or pool of loanable funds for the banks. Thus, savings is becoming a disutility to the economy. The mirror of this is that they want to encourage more consumption spending. Increased consumption or demand for comsumer goods will encourage further production, employment and economic growth. It can also fuel inflation if firms cannot meet up with the increased demand. Also, there is the risk that Nigerians will increase their demand for foreign goods as has always been the case when too much cash is available at their disposal. This will also then lead to depreciation of our local currency compared to the dollar.

Let me not bore you with too many scenerios that can arise from this policy. Lets fold our hands and watch the forces play out. Enjoy your day.

dantti2006:
Take this from a banker with an apex bank. It's not true. Although at my bank the minimum you can fix is 5 million. Rates have dropped but not to the ridiculous levels stated here. Contact me if you need to do a fixed deposit with your amount and tenor let's discuss.

Excuse me sir, there is only one apex bank in Nigeria, which is CBN. Same applies to every country in the world. There is nothing like "an" apex bank.

This is a good news: this will curb delay in projects, delay of salary nd odas, as persons prefer holding money in fixed deposit to accumulate some interest bfo utilization.

Another way of reducing the amount of money (banks money) in d system which is a check on inflation.
wayforward Mr Governor.

DjAndroid:
Don't they want to encourage savings anymore?

u don't encourage savings when there is poor liquidity. The level of income in the economy for consumption and investment is very low which is making savings very unfavourable at this point in time. In order to discourage this,the wise thing to do is to reduce interest rate so as to reverse this trend.

Adesiji77:


I have similar concerns too but decided to keep an open mind.

A banker would do "anything" to retain deposits, especially now with the implementation of the TSA.

Can CBN unilaterally fix the cap for FD rates?

Waiting to see a circular (if any) to that effect.

Who determines interest rates?
By Investopedia Staff
A:
In countries using a centralized banking model, interest rates are determined by the central bank.

In the first step of interest rate determination, the government's economic observers create a policy that helps ensure stable prices and liquidity for the country. This policy is routinely checked to ensure that the supply of money within the economy is neither too large (causing prices to increase) nor too small (causing prices to decrease).

Because retail banks are usually the first financial institutions to expose money to the economy, they are the principal instruments used by the central bank to manipulate the money supply. By adjusting the interest rates on the money it lends to or borrows from the retail banks, the central bank is able to regulate the supply of money to the end user (individuals and companies).

If the monetary policy makers wish to decrease the money supply, they will increase the interest rate, making it more attractive to deposit funds and reduce borrowing from the central bank. On the other hand, if the directors wish to increase the money supply, they will decrease the interest rate, which makes it more attractive to borrow and spend money.

Even with this, the rate has always bn btw 10% n 14%.

Bj5all:
I think the whole essence is to discourage saving so that there will be more money in circulation.

You are very right. It is to discourage savings and encourage investment. You must be my learned colleague.

sonssyo:


invest in a more viable sector like manufacturing, fixed deposits are meant for lazy peeps.Risk Averters.

Manufacturing

How does one invest in manufacturing ? Please explain how a lawyer with 2 million naira in the bank does this and what product specifically?

gayman99:
If this is true, then the prevailing interest rates on risk assets should drop too. If not, the masses will be at the receiving end.

If deposit rates go down, risk asset rate go up...

I haven't got any mail of the sort @ op

Thank you

jamace:
Looters will turn their rooms to banks. Expect very damp, smelly mould infested naira notes very soon.

Don't worry, they will be well airconditioned rooms. Some will even put the money in freezers; giving a new meaning to cool cash.

megainvest:
Welcome to the stock market where you can earn interests in thousands of percents and risk losing only 99.99% of your funds. Can you handle it?

ur contact ?bro

i asked GTBank, it is true. max rate for 1 million - 10 million is about 5%.

What CBN is doing is aligning Nigeria with the global economy. Nothing more nothing less. They have set rates similar to USA, Canada and UK so that Nigeria will not be out of line with these countries. CBN is being controlled by the west and all of their policies reflect this. Did you know that all Nigerian banks are also now required to report to IRS (Internal Revenue Service) of the USA? Its called FATCA.

Anyway this development is good; I was thinking of investing in Nigeria but the country doesnt want to help itself, so im gonna keep my money where I am :-)

Both Treasury Bills and Fixed Deposits will probably fall further. The two instruments are linked together. Banks take Fixed Deposits from you and usually buy treasury bills with it, and keep the difference between the rate of the Treasury Bills and Fixed Deposits. With the Treasury Single Account and other initiatives planned by the Buhari administration, government will likely reduce its dependence on Treasury Bills and focus more on long-term bonds.

The current high rate of return on Treasury Bills are actually unsustainable, as no country making progress operates with such high rates. This event will force people to remove their money from risk-free investments with low economic benefit like Treasury Bills and Fixed Deposits and put them into investments in business and economic activities that will benefit the economy and people of Nigeria. So, in the long-run, this initiative is better for Nigeria.

aadejesu:


I also work in a bank, and I can tell you categorically that I helped a customer fix 10million for 90 days @ 10%. Call me tomorrow on 08099337763 and we can talk about the best rates in the industry for your investment

It is 10% per month?

SleekReek:
I really don't understand why anyone in Nigeria will be doing fixed deposit with our inflation rates, you are only making money for the banks, who know how to use your money better than you, this doesn't not make sense.

seconded, will rather use for biz than fix into a thief account

Get your Casio Edifice , Diesel, Armani and Mechanical chronograph Tourbillion watch at an affordable price,visit link at signature

That is not good news but I work for an investment bank and i can get you good rates. say between between 8 - 15%. You can send an email to tajayi@cowryasset.com or call 08021022255.

Thank you

omonnakoda:
Manufacturing

How does one invest in manufacturing ? Please explain how a lawyer with 2 million naira in the bank does this and what product specifically?

As a lawyer wit 2m,you can invest in d production of pure water which will later metamorphosize to bottled water.

u can open a laundry office(medium sized).
or even a printing press with only DI machine and one computer,u furnish d place to taste,but u need to have little ideas of this things.

SleekReek:
I really don't understand why anyone in Nigeria will be doing fixed deposit with our inflation rates, you are only making money for the banks, who know how to use your money better than you, this doesn't not make sense.

You are so on point. Most of our politicians lack entrepreneurial skills and competency: they deposit the stolen funds in the banks instead of making use of the money so that more youths could be employed.

It is a good move on my own view.

sonssyo:


As a lawyer wit 2m,you can invest in d production of pure water which will later metamorphosize to bottled water.

u can open a laundry office(medium sized).
or even a printing press with only DI machine and one computer,u furnish d place to taste,but u need to have little ideas of this things.

I should stop practising law to go into pure water?

If this is true, then our Banking Sector is resetting in a positive dimension. Another area they also need to focus on is the area of loan Interest, they should reduce dat drastically since they have decided to reduce the Deposit interest at the detriment of Depositors. This will enable them to encourage pple dat need loan geninely for prospective projects. If you reason it deeply, you will know that, all these stupid EMBEZZLERS will be discouraged to fix their monies in bank now, rather they will invest in industries, manufacturing and other stuffs that can benefit Nigerians and promote employment/engagement instead of fixing the money idly in the banks (Although the bankers trade with the money, Oil business, international transaction, selective loans & ridiculous loan interest instead of giving out the money to Farmers, Developers, SMEs) . If the BUFFOONS calculate the ROI they will see investing in Agriculture (Aquaculture, cropping e.t.c) and they find out dat, it out-rates the interest/dividends they will get fixing dat money for months, nobody will tell them to do the needful. Especially those guvnors wey go carry Workers' salary go remit for Bank for 6 months b4 paying so as for them to scoop the interest earned within the period of deposit (Shame on Una!) Alla-Kua!

omonnakoda:

I should stop practising law to go into pure water?

I don't have time for all this,,,,,why are u agitating over reduced rates,take it or you leave it,better still put your money in the freezer,after all its a COOL CASH they say.Mr Lawyer

sonssyo:



I don't have time for all this,,,,,why are u agitating over reduced rates,take it or you leave it,better still put your money in the freezer,after all its a COOL CASH they say.Mr Lawyer

Agitating? How Did I mention the word; RATE anywhere? Did I express any opinion on ANYTHING?

You made a comment

sonssyo:


invest in a more viable sector like manufacturing, fixed deposits are meant for lazy peeps.Risk Averters.

and I tried to explore that with you and then you become irritable and obnoxious.
I am not a lawyer and have no 2million that was hypothetical. The point is your suggestion was capricious with no intellectual underpinning. Utter balderdash!!
It would be unfair for me to attribute that to your gender but it does seem true that most Nigerian women are empty heads with only one skill.
So a lawyer or any individual will just wake up one day and go into "manufacturing".
Sometimes if you have nothing intelligent to say just keep quiet and that way your ignorance remains anonymous why advertise it

omonnakoda:
Agitating? How Did I mention the word; RATE anywhere? Did I express any opinion on ANYTHING?

You made a comment

and I tried to explore that with you and then you become irritable and obnoxious.
I am not a lawyer and have no 2million that was hypothetical. The point is your suggestion was capricious with no intellectual underpinning. Utter balderdash!!
It would be unfair for me to attribute that to your gender but it does seem true that most Nigerian women are empty heads with only one skill.
So a lawyer or any individual will just wake up one day and go into "manufacturing".
Sometimes if you have nothing intelligent to say just keep quiet and that way your ignorance remains anonymous why advertise it

manner=zero.
whatever, you hv gat Ur hands,so go ahead and type any thing.no time for peeps like üuûuuû

Beg to disagree. A high deposit rate translates to high borrowing rates for the business people. If banks are paying 15% for example, they will have to lend out at about 20% so that they can cover cost and make money.





Am really impressed this morning seeing guys touch on issues like this on nairaland. So I've shared and liked loads of your thoughts. This should be trending with suggestions as to what government can do.
I think I've advocated that government need to expand its income through tax incomes, I think Fashola lectured the senate on this last week and this doesn't necessarily translate to higher tax rates.
Also government need to reduce the rates on its treasury bills , cut down interest rates, cut down its expenses especially all those unnecessary perks for its top echelon in the civil service, political appointees etc
Nigerians must begin to learn how to do business and I don't mean all the import based business and trading that keeps our consumer behavior perceptually glued to foreign products.
Now, our economy must be able to produce what we consume, from shirts to rice.One of the major problem is the idea of importing everything and killing the local industry and this is one of the reason the inflation rate keeps soaring.
Nigeria banks have not been active in the real sector of the economy and realistically speaking, its now high time they engage investments experts, risks managers and liaise with consultants in lending to SMEs and industrialist and spreading their incomes over a longer period/tenor.
We must understand the following:
1. The percentage of made in Nigeria goods must increase through the encouragement of productions. If am in government I will advise that at least 20 hours of electricity be given to industrial areas without fail especially Lagos, Ogun and cheranda in kano
2. Government must begin to look at reducing the number of MDGs to cut down costs may be targeting recurrent expenditure of 50% by end of 2016. Needless aides, needless training and medical allowances all should be cut off and ogas that have put in at least 30years in service should all be retired.
3. The SON should begin to work, I think government should begin to see the enforcement of its programs through institutional frameworks that can drive government policies.Such institutions as Nafdac etc need reforms a whole lots.
4. People into trading must begin to think investing in the production ends of their goods

Just my few line cos of time