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HOUSE OF REPRESENTATIVES DECRY HIGH LENDING INTEREST RATE BY COMMERCIAL BANKS

HOUSE OF REPRESENTATIVES DECRY HIGH LENDING INTEREST RATE BY COMMERCIAL BANKS
The Speaker of the House of Representatives, Rt. Hon. Yakubu Dogara has averred that "any economy that does not innovate, cannot produce, but will remain perpetually consumers. The banks are doing very well making excessive profits, while the real sectors of the economy are suffering. Collusive behaviors of banks have kept the interest rate artificially high. This is the motion for the moment; this is where the change starts". 
This statement added more weight to the resolution of the House during plenary session on Thursday, November 26, 2015, deploring the high interest rates being charged on lending by commercial banks in Nigeria and mandating the Committee on Banking and Currency to investigate the interest rate with a view to arriving at measures that will reduce lending interest rates to a single digit.

The resolution came on the heels of a motion calling for regulation of lending interest rates charged by commercial banks, standing in the name of Hon. Bode Ayorinde. He pointed out that it is an obligation for financial institutions to play prominent role in providing financial services that consequently lubricate the economies of nations; adding that government alone cannot provide all the necessary financial needs of the economy. He informed the House that currently the banks pay between 2% to 3% interest on savings, whereas they charge alarmingly high interest rate of 23% and 28% on lending.

He opined that this practice negates the fact that the twenty one licensed banks in the country are supposed to serve as financial intermediaries between those who have surplus fund for savings and those who require borrowings for various purposes. He made a comparative analysis of the benchmark interest rates of Malaysia which is at 3.25%, Singapore has an average of 1.67%, while the Central Bank of Nigeria fixed a benchmark of 13% for many years. Hon. Ayorinde explained that the commercial banks use the minimum rediscount rate as basis for fixing the lending rate to their customers.

Chairman, Committee on Banking and Currency while acknowledging the submissions of members who contributed to the debate informed that such factors as inflation, government interventions, operating cost, risk assessment and forces of demand and supply are indices that determine interest rates, he however advised that the Federal Government should set a monetary goal for the commercial banks and welfare of the citizens is the primary responsibility of government.

Meanwhile, the House has directed its Committee on Aviation to invite the Minister of Aviation to appear before it to explain what has been done about the discriminatory and unfair disengagement of Nigerians from the employ of Virgin Atlantic Airline. 
The directive came following a motion moved by the leader of the House, Hon. Femi Gbajabiamila, calling the attention of the House to the matter. He insisted that urgent action is required on the issue because it borders on the test of the resolve of the House of Representatives. He said this against the backdrop of a resolution that was passed on same matter by the House two weeks earlier.

He reminded the House that the matter was referred to the Committee on Aviation for investigation and pointed out that the Committee hadn’t carried out the task before the disengagement took place. 

On this note the Committee was asked to look into the matter immediately.

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