Reps move to scrutinise banks over ‘high’ interest rates
THE House of Representatives is to investigate the high interest rates charged by commercial banks.
The move followed the unanimous adoption of a motion titled: “Call for regulatory of the lending rate charged by commercial banks” and sponsored by Bode Ayorinde with Betty Apiafi, Solomon Adaelu, among others supporting.
Consequently, the chamber yesterday mandated its Committee on Banking and Currency to beam its searchlight on the matter with a view to coming out with measures to reduce the rate to a single digit.
The Jones Onyereri-led panel has four weeks to furnish the House with its recommendations.
Ayorinde had argued that while the banks currently pay between two and three per cent interest on savings, they, hoewever, charge astronomical interest rate ranging between 23 per cent and 28 per cent on lending.
According to him: “While the Central Bank of Nigeria (CBN) is accountable to Nigerians for 13 per cent benchmark interest rate, commercial banks achieve their super profits by whatever percentage they add to the apex bank’s rate.”
In a comparative analysis of interest rates in other countries as at July, the lawmaker said Italy was 1.5%; Canada, 0.05%; Japan, 0.00%; South Korea, 1.50%; Switzerland, 0.75%; UK, 0.50%; USA, 25%; Australia, 2.00%; China, 4.85%; Turkey, 7.5%; Indonesia, 7.5%; India, 7.25% and South Africa, 6.00%.
He said households, “both low income and high income categories, bear the greatest burden of high lending rates since increase in prices of food items and other manufactured goods impact on their expenditure patterns, reduce their welfare and reduce the purchasing power of their incomes.”
Many of the members who contributed during debate on the motion decried the high interest rates being charged by banks, insisting there was need to investigate and ascertain what was responsible for the development.