Indications have emerged that the 24 Deposit Money Banks in the country may reduce their lending rate by 30 per cent as from next year.Our correspondent gathered from a reliable source at the Bankers Committee, that the banks had unanimously endorsed an initiative by the Central Bank of Nigeria to reduce lending rates through a drastic cost-trimming strategy in line with the new e-payment regime.There has been a mismatch between deposit and lending rates by banks in the country with borrowers made to service retail loans with interest rates of between 18 per cent and 24 per cent.Similarly, the lending rate on overdrafts and local purchase orders is as high as 20 per cent, including two per cent as management and processing fees.If the banks implement the 30 per cent lending rate reduction as planned, then borrowers will have to service their loans with between 12.6 per cent and 16.8 per cent.The source, who craved anonymity because he was not permitted to speak officially on the issue said, The bankers, at their recent meeting, agreed to cut down operating expenses by as much as 30 per cent to make funds accessible to borrowers at lower rates.The e-payment initiative involves a transformation of the payment system and the idea is to permit banks to cut cost through moving the country from its present cash-and-carry status to one where people will make payments through electronic channels.The source noted that the direct cost of cash management being borne by banks was as huge as N114.5bn in 2009, and was projected to increase to about N192bn in 2012. The increase is about 68 per cent. The situation had increased the cost of lending by banks to borrowers.For us to appreciate the relevance of the initiative under consideration, it is important to note that banks take a number of factors into consideration before arriving at their lending rates. These factors include the rate they pay on deposits, their operating expenses and the margin they expect to make, the source explained.According to him, the Bankers Committee, which comprises the CBN, Nigeria Deposit Insurance Corporation, discount houses and the 24 DMBs, embarked on the initiative to reduce lending rates in order to make it possible for both large and small businesses to access credit at affordable rates.The source also pointed out that the cashless policy was changed to cash-lite policy at the last Bankers Committee meeting following the erroneous perception that people would no longer have cash on them when the policy kicked off.When contacted, the Head, Corporate Affairs Department, CBN, Mr. Mohammed Abdullahi, confirmed that the apex bank had proposed an initiative to the banks to reduce their lending rates.He, however, said he had no information on whether the banks had endorsed the proposal or not.I can confirm to you that the CBN has proposed the initiative to the banks but I dont have information on the endorsement by the banks. The banks should confirm that. I can also confirm to you that the cashless policy has been changed to cash lite policy, Abdullahi said.While some of the banks corporate affairs officials confirmed that the cashless policy would reduce the cost of running business thereby bringing down their lending rates, others said they had not been briefed on the issue.The CBN under the new cash-lite regime, permits a daily cumulative limit of N150,000 and N1m on cash withdrawals and lodgements by individuals and corporate customers respectively.Individuals and corporate organisations that make cash transactions above the limits will be charged a fee of N100 per thousand and N200 per thousand respectively, while third-party cheques above N150,000 will not be eligible for encashment over the counter and will only be paid through the clearing house.
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