An official announcement has been made by the Central Bank of Nigeria regarding the lifting of the suspension on its Standing Lending Facility for authorised dealers.
Intended for regulating money supply and liquidity in alignment with monetary policy objectives, Standing Facilities are utilized by the Central Bank. The Standing Lending Facility facilitates banks in borrowing from the CBN.
A circular, signed by Omolara Duke, the Director of the Financial Markets Department, stated that the suspension was lifted following a decision made at the latest Monetary Policy Committee meeting. The adjustment raised the upper corridor of standing facilities to 5.00 per cent from 1.00 per cent around the Monetary Policy Rate.
During the last meeting, the Monetary Policy Committee also raised the Monetary Policy Rate to 26.75 per cent.
As mentioned in the statement, “The suspension of the Standing Lending Facility is now lifted, and Authorised Dealers are required to submit their SLF requests through the Scripless Securities Settlement System (S4) between 5.00 pm to 6.30 pm, operating hours.”
According to the circular from the apex bank, Authorised Dealers can now access the SLF at 31.75 per cent and can use the ILF at no cost to prevent system congestion if repaid the same day.
Moreover, “Participants failing to settle their ILF will face a 5.00 per cent penalty according to S4 business rules which the system will convert to SLF at 36.75 per cent,” further stated the circular.
In a separate circular issued on Monday, the CBN confirmed that the adjusted Standing Facilities for banks are now in effect.
Banks are now subject to a 31.75 per cent rate for the Standing Lending Facility, used for borrowing short-term funds from the CBN. The rate for the Standing Deposit Facility, which applies to bank deposits at the CBN, has been raised to 25.75 per cent.
It was also specified in the circular that Commercial and Merchant Banks will receive a rate of 25.75 per cent on deposits up to N3bn. For deposits exceeding this threshold, a lower rate of 19 per cent will be applicable.
Payment Service Banks are set to earn 25.75 per cent on deposits up to N1.50bn, with amounts exceeding this limit attracting a rate of 19 per cent.