CBN cuts Daily Standing Deposit facility to N2bn
The Central Bank of Nigeria (CBN) on Wednesday released new guidelines on Standing Deposit Facility (SDF) for banks and discount houses in the country.
In a circular signed by the Director in charge of Financial Markets Department at the central bank, Ms Angela Sere-Ejembi, it was said that interest would no longer be paid on any deposit above N2 billion.
Before the release of these new guidelines, which take effect from July 11, 2019 (today), the limit was N7.5 billion.
But its determination to stimulate lending to the critical sectors of the economy, including the Micro, Small and Medium Enterprises (MSMEs), the CBN is coming up with these rules to force banks to release the excess liquidity to those who need it for business.
In the circular with reference number: FMD/DIR/CON/ONG/12/2019, the apex bank said, “The remunerable daily placements by banks at the SDF shall not exceed N2 billion.
“The SDF deposit of N2 billion shall be remunerated at the interest rate prescribed by the Monetary Policy Committee from time to time.
“Any deposit by a bank in excess of N2 billion shall not be remunerated.”
Earlier this month, the central bank issued a circular mandating financial institutions in the country to increase their loan to deposit ratio to 60 percent by the end of third quarter of this year.
Not one third of the over 20 banks operating in Nigeria have LDR of 60 percent. The apex bank said any lender that fails to adhere by September 30, 2019, would be severely sanctioned.