Reps want CBN to reduce interest rate

The House of Representatives has called on the Central Bank of Nigeria to seek ways of reducing the high interest rate on loans given to customers by commercial banks and also find a solution to the high rate of non-performing loans in the banking sector.

The Chairman, House Committee on Banking and Currency, Sir Jones Onyereri, who made the appeal on Thursday, also advised the CBN to consider the establishment of the Financial Services Commission comprising both monetary and fiscal authorities.

He spoke at the end of an oversight visit by the committee to the CBN oHe said, “That is why we advise the CBN to work with the Ministry of Finance to find a way of reducing the level of domestic borrowing. I think that will also help in respect to the reduction in the interest rate. I think they should be able to work out all these to improve our economy.

“We were a little bit worried because of the increase in the MPR. We believe as a committee that that was not the best of decisions. But having heard from the CBN, we still want to tinker on what led them to come out with that decision, because for us, we were looking at the bigger picture of trying to grow the SMEs and the only way to grow the SMEs is to make credit accessible to them.

“But making credit accessible to them will not work out with a very high interest rate. But we believe along the line, we will be able to create a perfect balance.”

On the rising NPLs, Onyereri said the committee had noted that substantial parts of the loans were insider abuse within the financial system.

He called on the CBN to wield the big stick against culprits to serve as a deterrent to others in the system.

While calling for an increased lending to the real sector, the committee chairman said there was a need to bridge the gap between the exchange rate at the parallel and the official forex market.

He added, “I think the apex regulator was smart enough to let the market determine the rate and I think that is what they are still working on; and for any policy that comes out, it will be too early to say whether it is working or not, but I believe so far so good; the only difference is between Nigerians who will always try to make the worse out of every situation.

“We are looking at issues as they concern the forex to see whether the CBN can bridge the gap between the official and the parallel market rates. If that is well achieved, then the flexible exchange rate will change.”

ffice in Lagos.