The Central Bank of Nigeria (CBN) on Monday ordered all deposit money financial institutions in the country to restructure loan terms and tenors to households and businesses affected by the coronavirus outbreak.

LagosTimes reports that the CBN governor, Godwin Emefiele, while addresing newsmen said the interest rate of its intervention programmes has been cut to 5% from 9%.

“The CBN hereby grants all deposit money banks leave to consider temporary and time-limited restructuring of the tenor and loan terms for businesses and households most affected by the outbreak of Covid-19 particularly oil & gas, agriculture, and manufacturing,” he said.

“The CBN would work closely with DMBs to ensure that the use of this forbearance is targeted, transparent and temporary, whilst maintaining individual DMB’s financial strength and overall financial stability of the system.”

The apex bank announced five policies in total.

The CBN said beneficiaries of its intervention facilities have been granted an additional one-year moratorium on principal repayments effective March 1, 2020.

“This means that any intervention loan currently under moratorium is hereby granted an additional period of one year,” Emefiele said.

A moratorium is the delay period which is given before the payment of a loan.

“Interest rates on all applicable CBN intervention facilities are hereby reduced from 9 to 5% per annum for 1 year effective March 1, 2020.”

The apex bank said it has created a N50 billion credit facility for small and medium-sized businesses that have been affected by the coronavirus outbreak.

“The CBN hereby establishes a facility through the NIRSAL Microfinance Bank for households and small- and medium-sized enterprises (SMEs) that have been
particularly hard hit by Covid-19, including but not limited to hoteliers, airline service providers, health care merchants, etc.”

It has also extended intervention facilities and loans to pharmaceutical companies ” intending to expand/open their drug manufacturing plants in Nigeria, as well as to hospital and healthcare practitioners who intend to expand/build the health facilities to first-class centres”.

“The bank stands ready to provide liquidity backstops as and when required in view of its role as banker to the federal government and lender of last resort.”

This is the first action the central bank is taking in response to the coronavirus outbreak that began in China in December.

The US federal reserve, on Sunday, announced that it has cut interest rates to near-zero to combat the economic impact of the coronavirus.