CBN Resumes Standing Lending Facility, Fixes 25.75% Interest On Deposits

The Central Bank of Nigeria (CBN) has lifted the suspension of the standing lending facility for banks in the country and fixed interest on their deposits between 19 and 25.75 per cent, having adjusted the asymmetric corridor at the last monetary policy committee (MPC) meeting.

The apex bank said that the adjusted Standing Lending Facility (SLF) and Standing Deposit Facility (SDF) for authorised banks have become effective from Monday August 26, 2024.

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.

In a circular signed by Director, Financial Markets Department, Dr Omolara Duke and 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 deposits above N1.5 billion will attract interest of 19 per cent.

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Meanwhile, it said, pursuant to the adjustment of the asymmetric corridor, “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.”

Consequently, banks are permitted to borrow from the CBN through the SLF window at 31.75 per cent. The circular noted that authorised dealers are now “permitted to access 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.”