Boosting stability in the financial sector, the Central Bank of Nigeria has raised its Standing Lending Facility rate to 31.75 percent.
In a circular issued on Monday by Omolara Duke, the Director of the Financial Market Department, the apex bank disclosed the increase in the SLF rate, lifting the suspension on SLF.
Additionally, the rate for the Standing Deposit Facility (SDF), which applies to bank deposits at the CBN, has been raised to 25.75 percent.
These policy adjustments are set to be implemented immediately.
The decision to increase the SLF rate was made during the 296th meeting of the Monetary Policy Committee (MPC) in July 2024, where revisions to interest rate policies were sanctioned.
As part of these changes, the CBN adjusted the Asymmetric Corridor around the Monetary Policy Rate (MPR) from +100/-300 basis points (bps) to +500/-100 bps.
This move aims to discourage excessive liquidity holding by banks at the central bank and encourage more lending activities.
Authorized Dealers are now allowed to request SLF through the Scripless Securities Settlement System (S4) within operating hours from 5:00 pm to 6:30 pm.
Moreover, Authorized Dealers are permitted to access the SLF at 31.75 percent and the ILF at no cost if repaid on the same day to prevent system gridlock.
A 5.00 percent penalty is upheld for those who fail to settle their ILF, which will be converted to SLF at 36.75 percent by the system.
The reintroduction of collateral execution, as outlined in the approved repo guidelines, involves the rediscounting of instruments pledged by participants at the penal rate by the CBN.