CBN Directs Banks to Publish Rates on Websites
•Halts common year-end policy


In a bid to ensure transparent interest rates and engender healthier competition, the Central Bank of Nigeria (CBN) yesterday directed banks to publish their deposit and lending rates as well as charges for all the sectors of the economy on their websites.
Briefing newsmen on the outcome of the Monetary Policy Committee (MPC) meeting, which held yesterday in Abuja, CBN Governor, Professor Chukwuma Soludo, also said the uniform financial year end policy for banks and discount houses in the country initially billed for December 2008 but shifted to December 2009 a fortnight ago, was no longer a requirement for banks.
Rather, he said it would now be left to the discretion of banks.
He also said the nation’s external reserves stood at $60.31 billion at July 31, 2008. This, he said, represented an increase of $8.98 billion over the level in December 2007.
Throwing more light on the interest rate directive, he said banks are also expected to update their rates daily and report same to it so that it would publish a summary of the respective rates every month.
“In order to ensure a transparent pricing regime in the money market and thereby foster healthier competition, banks are required to fully disclose to the public, deposit rates as well as their base lending rates and other charges for all the sectors of the economy. These should be published on their respective websites and updated daily. The banks are required to report these rates to the CBN to enable the bank to publish a summary of the rates for each deposit money bank every month,” he said.
The directive on the publishing of rates and charges may not be unconnected to the irrational and voracious manner with which banks recently mobilsed deposits at exorbitant rates and pass it on to customers by building in some hidden charges in their transactions – a development which culminates in the high interest rate regime, which has reduced private sector lending.
It was based on this development, which THISDAY had exclusively reported that the CBN announced a fortnight ago that it had shifted the uniform financial year end policy for banks and discount houses to December next year. Justifying the postponement, the CBN had said the decision was in response to irrational behaviour of some banks in mobilising deposit and jacking up of interest rates, which could not be defended.
Meanwhile, while reviewing interest rates development between June and July, 2008 yesterday, Soludo said: “The MPC noted the upward movement of most key interest rates in response to the prevailing market conditions. The average inter-bank call rate edged up by about 0.2 percentage point to 10.40 per cent in June 2008. It rose to 13.95 per cent at the end of July 2008. Rates on time deposits of various maturities as well as the maximum the lending rate also rose.”
He however, said the Monetary Policy Rate (MPR), which has been raised thrice this year (from 9.25 to 9.5 per cent last January, from 9.5 per cent to 10 per cent in April and further to 10.25 per cent last June), will remain unchanged since the core inflation is expected to remain at a relatively moderate level.
The MPR, which is the CBN’s benchmark interest rate, is the rate at which the banking watchdog lends to commercial banks. It indirectly mirrors the direction of other interest rates in the economy.
Soludo said the MPC noted with satisfaction the continued increase in international reserves.
He said: “The gross external reserves amounted to $60.31 billion as at July 31, 2008 representing an increase of $8.98 billion over the level in December 2007. The level of external reserves is likely to remain high in the remainder of the year partly owing to the expectation that oil prices would remain at elevated levels and partly to private capital flows.”
He noted that the exchange rate of the naira had generally been stable. “The staff assessment is that there would be continued orderliness in the foreign exchange in the remaining months of the year, “he added.