CBN Explains Why Banks Are Lending At Single Rate
Naira. File

Deputy Governor, Economic Policy, Central Bank of Nigeria, Joseph Nnanna, has said banks won’t lend money at single digit due to the attractiveness of treasury bills.

Treasury bill is an instrument used by the Federal Government to borrow money from money mark with Nnanna saying that with the government borrowing from banks at an average rate of 18 percent, it would be hard to get a single digit lending rate.

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He said this on Thursday in  Abuja on the sidelines of the African Export-Import Bank’s annual conference.

“Banks have some challenges at lending at a single digit interest rate not because they don’t want to do so, but because there are compelling needs, and I am saying this without any fear of contradiction,” the CBN boss said.

“If the government in its self is willing to borrow at 18 percent from the banks through treasury bills, why should any banker lend from anybody at a single digit?

“So, that is the problem. If the government can stop borrowing and start living within its means, liquidity will be there and banks will be constrained to lend at a single digit.

“Now, see what is happening; the government has decided to finance part of its budget externally, they are offloading treasury bills and treasury bills rate have now dropped from 18 percent; and as I speak to you now, it is 10 percent.

“So, banks will be awash with liquidity and they will look out for MSMEs and lend the money to them. So, let us put our fiscal house in order; once we do that, all will be well.”