The Central Bank of Nigeria (CBN) yesterday reviewed the interbank lending and deposit rates under the Standing Lending Facility (SLF) and Standing Deposit Rate (SDF) rules for banks.
The apex bank said the new rates will apply to commercial banks, merchant banks and Payment Service Banks (PSB).
In a circular to authorised dealers titled: “Operationalisation of the Standing Deposit Facility (SDF) Asymmetric Corridor” signed by the CBN Director, Financial Markets Department, Omolara Duke, the apex bank pegged the Standing Lending Facility (SLF) for commercial and merchant banks at 25.75 per cent for deposits up to N3 billion and 19 per cent for excess deposits above the initial N3 billion.
The directive was backed by sections 12 and 30 of the CBN Act 2007, which empowered the Monetary Policy Committee (MPC), at its 296th meeting to adjust the Asymmetric Corridor to +500/-100 basis points (bps) from +100/-300bps around the Monetary Policy Rate (MPR). The SLF was adjusted to 31.75 per cent while the SDF was moved to 25.75 per cent.
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According to industry data, the CBN uses SDF and SLF to market industry liquidity and ensure that funds are accessed by banks in dire need of liquidity.
The SLF is an overnight CBN credit available on banking days, with settlement done on same day value. Funds were sourced mainly from time, savings and foreign currency deposits, as well as accretion to unclassified assets. The funds were used, largely, to extend credit to the private sector and payment of claims on demand deposit.
Under the new rule, Payment Service Banks (PSBs) are to pay 25.75 per cent for deposits up to N1.5 billion, and 19 per cent for excess deposit above the initial N1.5 billion.
According to the guideline, the MPC adjusted the upper corridor of the standing facilities to five 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,” the guideline said.
Authorised dealers were further permitted to access the SLF at 31.75 per cent, access Intraday Lending Facilities (ILF) to avoid system gridlock at no cost if repaid the same day.
“The five 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 new rule said.