CBN responds to Corvid-19, cuts interest rate

The Central Bank of Nigeria, CBN, has directed all Deposit Money Banks to restructure loan terms and tenors to households and businesses affected by the coronavirus outbreak.

It also announced that it has created a N50 billion credit facility for small and medium-sized businesses that have been affected by the coronavirus outbreak.

The apex bank announced five policies.

The CBN Governor, Godwin Emefiele, said the interest rate of its intervention programmes has been cut to five percent from nine percent.

“The CBN hereby grants all deposit money banks 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.

“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 said beneficiaries of its intervention facilities have been granted an additional one-year moratorium on principal repayments effective March 1.

“This means that any intervention loan currently under moratorium is hereby granted an additional period of one year,” Emefiele said.

A moratorium is the delay period which is given before the payment of a loan.

‘‘Interest rates on all applicable CBN intervention facilities are hereby reduced from nine to five percent per annum for one year effective March 1.

“The CBN hereby establishes a facility through NIRSAL Microfinance Bank for households and small- and medium-sized enterprises (SMEs) that have been particularly hard hit by Covid-19, including but not limited to hoteliers, airline service providers, health care merchants,” said the CBN chief.

It has also extended intervention facilities and loans to pharmaceutical companies intending to expand/open their drug manufacturing plants in Nigeria, as well as hospital and healthcare practitioners who intend to expand/build the health facilities to first-class centres.

“The bank stands ready to provide liquidity backstop as and when required in view of its role as banker to the federal government and lender of last resort,” he added.

This is the first action the CBN is taking in response to the coronavirus outbreak that began in China in December.

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