wow..advisory rate by CBN right. so what then is it used for.?

please MPR is a benchmark rate. ( no controversy) and it is used to determine overall lending rate. these two indices are proportionally related.
ask any economist or ask Bismarck Rewane himself.
there is an article on him sometimes last month and he clearly stated this.

chloride6:


The MPR is an advisory rate...Doesn't determine much as it is seldom used in credit pricing in Nigeria..

ntyce:
Good news

lol. U need to be inform

Simply put, the lesser reward for investors. It's actually means Nig. govt is doing yanga and they are not wi

VicThory:
Is it for good or bad?


I don't understand

urahara:



If people and banks are banned from the OMO, then who now goes ?

Large corporations

Just2endowed2:


You think so? Guy wake up. Bank lending rate will never fall. That crook cbn governor had so much enrich bank books and make banks more lazy.

If nigeira is following the principle of economics, all rates from cbn and commercial banks ought to have been reduced,but rather the cbn governor is enriching the banks and his foreigns friends. Why did he kick individuals out of the omo market and allow commercial banks and his crook foreign friend to control the market?

It will fall, it is alreading falling.....

With the LDR cap of the CBN, it is a must for banks to give out loans....
This increased competition coupled with low cost of funds will bring down lending rate.

DEBJOCH1:
I SO MUCH LOVE THAT, EVERY LAZY MEN NOW DO TREASURY BILL INSTEAD OF INVEST THE MONEY TO CREATE MORE JOB AND EMPLOYMENT. A N1M PUT IN USE INTO A RIGHT BUSINESS WILL BRING YOU MORE THAN 20% ROI AND SAME N1M WILL TAKE AT LIST 2 HOME OUT OF LABOUR MARKET, BUT WHAT PEOPLE DO IS TO GIVE THE MONEY TO FEDERAL GOVERNMENT IN THE NAME OF TREASURY BILL. KUDOS TO GOVERNMENT MONETARY REGULATORS ON THIS, THEY SHOULD FURTHER SCRATCH DOWN THE RATE TO 1% TO DISCOURAGE PEOPLE FROM DINING TB. THERE ARE THOUSAND AND ONE THINGS TO INVEST YOUR MONEY INTO, BUT SOME BLIND PEOPLE WONT SEE THE OPPORTUNITY.

Yes, I'm blind. Please, give me examples of good businesses with guaranteed returns, which one can do with N1m.

I'm waiting for your response. Thank you.

ntyce:


It will fall, it is alreading falling.....

With the LDR cap of the CBN, it is a must for banks to give out loans....
This increased competition coupled with low cost of funds will bring down lending rate.

Not with the MPR still at 13.5%.

The MPR, much more than the TB rate, determines bank rates.

ntyce:


It will fall, it is alreading falling.....

With the LDR cap of the CBN, it is a must for banks to give out loans....
This increased competition coupled with low cost of funds will bring down lending rate.

Quote me back in a month if that lending rate crash to 20% by commercial banks

[quote author=bravehost4u post=84014551]
It's simple.
As Fixed Deposit is to Commercial Banks, Treasury Bill is to CBN. TBills is kind of a loan to the Government.
The summary of it is that Since a lot of people are willing to lend to government, the government have the upper hand to say they will pay less interest.
From another perspective to view the single digits rate is; CBN wants to encourage investments in the real sector by making



Perfect and more understandable reply......thanks

What it's all about is that, people over subscribed for it and the only way to get people off it is to reduce the rate.... Too much demand chasing limited supply

.. Pls i am a banking and finance student, can someone explain more about this to me?

I bliv learning is unending [/quote]

blastac:
They have reduced the interest you get after purchasing treasury bills from 2 digits(10 and above) to single digits (9 ) so as to discourage purchasers... Which school are you studying banking and finance and which level

So that u can mock me Abi.. Oya how many management students can interpret this, even masters student.. Bcox I don't know, u wana mock me..

Haba everything can be learnt in the class na

arigo26:
What it's all about is that, people over subscribed for it and the only way to get people off it is to reduce the rate.... Too much demand chasing limited supply

.. Pls i am a banking and finance student, can someone explain more about this to me?

I bliv learning is unending

Thanks.. I bliv learning is not only withing the classroom

DenreleDave:


.. Pls i am a banking and finance student, can someone explain more about this to me?

I bliv learning is unending

What level are you and which school?

Lush100:
wow..advisory rate by CBN right. so what then is it used for.?

please MPR is a benchmark rate. ( no controversy) and it is used to determine overall lending rate. these two indices are proportionally related.
ask any economist or ask Bismarck Rewane himself.
there is an article on him sometimes last month and he

clearly stated this.

Banks dont benchmark loans to MPR...

They are mostly fixed or they use NIBOR..

The market will react much more to OMO Auction rates than MPR..

There is nothing in the market that is the MPR is directly linked with asides from the lending corridor banks access the CBN SDF and SLF window..

But in our market, this is not really important. Banks dont like to use the SLF, it's an omen of trouble..Banks will rather borrow at 500% at the Interbank..

The SDF is capped at N2bn per bank so...

Like I said it's a advisory rate supposed to help the CBN.

FindingNigeria:
This will suffer low patronage.
We will move to money market and mutual funds.

The money markets rely heavily on TB for investment.
The money markets rates are already crashing as we speak.

Leadafrica:
After so many people were enticed and they invested, now you bring the rates down, issorait

They have already changed it to fixed deposit.
Imagine saying 10% for a year.
That's crafty, they should just tell people to fix their money instead.

InvertedHammer:

/
Name one business that gives 20% ROI in Nigeria after overhead (salaries, rent, tax, diesel/fuel, extortion, etc). Nigeria (especially this Buhari's regime and dearth of infrastructures) is not business friendly--too many unstable variables.

/

Crowd funding Agro gives you that

Sir, i do not like arguing.
.
please see link below

https://www.ajol.info/index.php/ijah/article/view/106446


quotes from the article
" Government in a bid to regulate the affairs of the economy would always use MPR as one of its instruments; which is an interest rate at which CBN lends to commercial banks and other clients. The execution of one of these instruments at time causes others to response either positively or negatively"

"These tests were conducted, using Granger causality test, to know the direction of their relationships and how they are caused. The finding revealed that almost all the variables, with the exception of bank savings rate, exhibit a strong sign of co-moving in the long run with the tendency of converging. T[b]The research revealed that there exist unidirectional causality between monetary policy rate and bank lending rate;[/b] bank lending rate and bank savings rate"
Thanks for your time.

chloride6:


clearly stated this.

Banks dont benchmark loans to MPR...

They are mostly fixed or they use NIBOR..

The market will react much more to OMO Auction rates than MPR..

There is nothing in the market that is the MPR is directly linked with..

Like I said it's a advisory rate supposed to help the CBN.

ntyce:
Good news

No be by force to comment,
what good about this if you are investor?

Well, after reading so much comments about the story.

I will like to contribute my 1 cent to the discussion.

Do you know that the federal government issues Treasure Bills and other short term financial instruments in order to mop up excess liquidity in the economy?

That is to say, when the government issues Treasury Bills or Treasure Certificate, people will subscribe to it by buy buying some portion. In that case, they purchase the instrument by paying the government.
By doing so, it's a strategy by the monetary policy authority to control excess flow of credit in the economy. This is to control some economic vices by the monetary policy authority.

This is in monetary terms referred to as Contractionary Monetary Policy.

On the other hand, it's an investment avenue for investors, very profitable and risk free.

studentofTruth:


Not with the MPR still at 13.5%.

The MPR, much more than the TB rate, determines bank rates.

I expect the MPR to to slashed at the next committee meeting.

Lush100:
Sir, i do not like arguing.
.
please see link below

https://www.ajol.info/index.php/ijah/article/view/106446

Thanks for your time.

Forget article, you don work for bank treasury before?

I dey yarn you wetin dey for ground you dey post article..



It only determines the SDF and SLF both of which arent really important for reasons I have explained below...

studentofTruth:


Not with the MPR still at 13.5%.

The MPR, much more than the TB rate, determines bank rates.

The MPR is very useless, very very..

bizhop01:

No be by force to comment,
what good about this if you are investor?

Is it a must that you quote me?

By standard Tbills ought to carry the lowest rate cos it is almost risk free....
You are guaranteed principal and interest in as much as Nigeria still exist.
The CBN ought not to compete with commercial banks in securities market, it offers Tbills at margins far higher than commercial bank fixed deposit which carries a higher risk.

chloride6:


Forget article, you don work for bank treasury before?

I dey yarn you wetin dey for ground you dey post article..



It only determines the SDF and SLF both of which arent really important for reasons I have explained below...

.

ALright . end of discussion.
nice day.

salt1:


This new rates don't affect previous investments.

Let me explain to those asking whether it's good or bad. TB means lending money to government for 90 days, 180 days or 364 days. The interest rates differ. So the longer the loan (tenor), the higher the rate.
People have earned 18% on one year TB. With this new policy, they will earn between 7% and 10%. So it's bad for investors, but good for government that will pay cheaper.
The interest rate is paid upfront and the main money is paid on maturity.

Has the payment of interest upfront always been so?

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Lukmanraji:

What level are you and which school?

Why are you asking me

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We expect MPR to crash in the next meeting thereby reducing the cost of capital for the borrowers

InvertedHammer:

/
Do you really believe that Nigeria as constituted cares for everyone?

They know themselves. Why go through the hassle of business in a country like Nigeria with her volatile business policies when the money could quietly be working for you hassle free?

/

So I was all gong ho about setting up business here once I retired. I registered company name with CAC, rented out a small office so I can continue too feel productive.

I gave myself 6 months to age into the society and system. In that timeframe I discovered three things.

1) Employment pool: lot's of our people are frustrated and this leads to a ridiculous customer service experiences. I can't hire a female in Nigeria, I simply can't. The men are slightly better but to write properly is an issue.

2) Products: the products of my hobby that I want to sell are not in demand to many due to the issue of money for the middle class.

3) Investment: So one day I went to chit chat with my banker ands she mentioned bills and 12% rate. Everything became clear to me.

Why go through all the Nigerian hassles, the unbalanced regulations, etc when I can just put my money in bills and just sit back?

So that's what I did.

Pm me if you need a return of 30% per annum