Senate Summons CBN, Banks, Others Over High Interest Rates

To reduce the strangulating high interest rates charged on loans by financial institutions in the country, the Senate Committee on Banking, Insurance and Other Financial Institutions has summoned the Central Bank of Nigeria, Nigeria Deposit Insurance Corporation and Deposit Money Banks to a meeting on Tuesday.
The New Diplomat learnt the Senate panel has also invited the Manufacturers Association of Nigeria and several other bodies to the meeting based on a motion by the Chairman of the committee , Senator Rafiu Ibrahim.
The President of the Senate, Bukola Saraki, had earlier criticised the charging of high interest rates on loans by Small and Medium – scale Enterprises in the country , a situation he said had forced some firms to close shops .
Saraki had hinted that the Senate would meet with the CBN , the DMBs and other financial institutions on the matter, with a view to bringing down the lending rate.
I was further gathered that stakeholders in the financial and manufacturing sectors had been called to the meeting.
Among the invited stakeholders were: development finance banks, the Chartered Institute of Bankers of Nigeria, the Manufacturers Association of Nigeria, the Nigerian Association of Small and Medium Enterprises and the Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture.
Also invited was the Lagos Chamber of Commerce and Industry which is under NACCIMA and the National Economic Summit Group.
The Senate had last Tuesday said Nigeria’s banking sector was being run by a cartel, a situation which was frustrating the monetary and fiscal policies of the Federal Government, adding that the group of bank owners had become strong that it was manipulating the economy.
The upper chamber of the National Assembly also condemned the high interest rates being charged by the DMBs on the SMEs. The legislature stated that Nigeria ’s economy could not survive when it was difficult to run businesses.
The lawmakers had unanimously resolved to mandate the committee to organise a roundtable with the CBN, DMBs, Nigeria Deposit Insurance Corporation as well as other relevant stakeholders and industry experts.
According to the Chairman of the committee on Banking, Insurance and other financial matters, Senator Rafiu Ibrahim the roundtable is expected to find “immediate , sustainable and lasting solutions that will help usher in a new interest rate regime that supports enterprise development in Nigeria.”
In a recent interview with journalists in Ilorin, the Kwara State capital, Saraki had stated that in an economy where workers were being retrenched and people were losing investments, it was immoral for certain sectors to be making astronomical profits.
He said, “The banks will tell you that they are doing business but in doing business , there must be social responsibility. We must be able to sit down and look at ourselves eyeball to eyeball , and we intend to do that; and I can promise Nigerians that we can find a solution. Hopefully with the stability in the forex market, we will now begin to address the high interest rate.
“There is no business that can make money if it is trying to borrow at 28 or 29 per cent . It cannot work and if we cannot get the banks to lend to the real sector and they carry on their money to government instruments, there cannot be growth,” Saraki said.
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