CBN LIFTS BAN ON STANDING LENDING FACILITY

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The Central Bank of Nigeria has announced the lifting of the suspension on its Standing Lending Facility for authorised dealers.

Standing Facilities are used by the Central Bank in the framework of the monetary policy objectives to regulate money supply and liquidity. The Standing Lending Facility enables banks to lend from the CBN.

A circular signed by the Director, Financial Markets Department, Omolara Duke, said that the suspension was lifted in alignment with the decision taken at the last Monetary Policy Committee meeting which adjusted the upper corridor of the standing facilities to 5.00 per cent from 1.00 per cent around the Monetary Policy Rate.

The Monetary Policy Committee at the last meeting also raised the Monetary Policy Rate to 26.75 per cent.

“Consequently, the suspension of the Standing Lending Facility is hereby lifted and Authorised Dealers should send their request for SLF through the Scripless Securities Settlement System (S4) within the operating hours of 5.00 pm to 6.30 pm,” part of the statement read.

Providing details, the apex bank circular indicated that Authorised Dealers are permitted to access the SLF at 31.75 per cent, and permitted to access ILF to avoid system gridlock at no cost if repaid the same day.

Also, “The 5.00 per cent penalty (as stated in the S4 business rules) is retained, for participants who do not settle their ILF, which the system will convert to SLF at 36.75 per cent,” the circular continued.

In a separate circular on Monday, the CBN said that adjusted Standing Facilities for banks are now effective.

The Standing Lending Facility rate, which banks use to borrow short-term funds from the CBN, has been raised to 31.75 per cent. The Standing Deposit Facility rate, applicable to deposits made by banks at the CBN, has been increased to 25.75 per cent.

The circular also specified that Commercial and Merchant Banks will receive 25.75 per cent on deposits up to N3bn, while deposits exceeding this amount will attract a lower rate of 19 per cent.

Payment Service Banks will receive 25.75 per cent on deposits up to N1.50bn, with amounts over this threshold earning 19 per cent.