The Central Bank of Nigeria (CBN) on Monday lifted the suspension on lending to banks through its Standing Lending Facility (SLF) adjusting the lending rate to 31.75 per cent interest rate while the Standing Deposit Facility (SDF) was adjusted to 25.75 per cent.
CBN, in a circular signed by its Director Financial Market Department, Dr. Omolara Duke, also said that commercial and merchant banks would earn a 19 per cent interest rate on deposits above N3 billion in its Standing Deposit Facility (SDF). There is also 19 per cent interest on deposits above N1.5 billion for Payment Service Bank (PSB).
The CBN has also lifted the suspension of the standing deposit facility for banks in the country and fixed interest on their deposits between 19 and 25.75 percent.
The decision followed the adjustment of the apex bank’s asymmetric corridor at the last Monetary Policy Committee (MPC) meeting.
At its last meeting in July, the MPC had raised the monetary policy rate by 50 basis points to 26.75 per cent from 26.25 per cent and adjusted the asymmetric corridor around the MPR to +500/-100 from +100/- 300 basis points, whilst leaving other parameters unchanged.
According to the circular issued to all authorised dealers, the apex bank said the interest rate on deposits would be based on the amount deposited.
According to the circular, commercial and merchant banks will get up to 25.75 per cent interest for deposits up to N3 billion, while deposits above N3 billion, will attract a 19 per cent interest.
For Payment Service Banks (PSBs), deposits up to N1.5 billion will earn them the 25.75 per cent interest whilst deposit above N1.5 billion will attract interest of 19 per cent.
Explaining the reason behind the SLF rate, the apex bank said that the direction was based on the decision of the Monetary Policy Committee (MPC) adjusting the upper corridor of the standing facilities to 5.00 per cent from 1.00 per cent around the Monetary Policy Rate, MPR, at its 296th meeting.
CBN said: “The Monetary Policy Committee (MPC) adjusted the upper corridor of the standing facilities to 5.00 per cent from 1.00 per cent around the MPR, at its 296th meeting.
“Consequently, the suspension of the Standing Lending Facility (SLF) is hereby lifted and Authorised Dealers should send their request for SLF through the Scripless Securities Settlement System (S4) within the operating hours of 5.00pm to 6.30pm.
“To this end, Authorised Dealers are permitted to access the SLF at 31.75 per cent; Permitted to access Intraday Lending Facility (ILF) to avoid system gridlock at no cost if repaid the same day;
“The 5.00 per cent penalty (as stated in the S4 business rules) is retained, for participants that do not settle their ILF, which the system will convert to SLF at 36.75 per cent;
“Collateral execution (the rediscounting of instruments pledged by participants at the penal rate by CBN) is reintroduced as stipulated in the approved repo guidelines. “The circular takes immediate effect.”
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