Effective from tomorrow (July 11), the Central Bank Bank of Nigeria says it will no longer remunerate daily bank deposit in excess of N2 billion placed at its (CBN) standing deposit facility (SDF).
The SDF is a store room created by the CBN to help banks keep their excess deposits overnight.
According to a circular released today (July 10) by the apex bank and signed by Angela Sere-Ejembi, director, financial markets department, SDF deposit of N2 billion shall, however, be remunerated at the interest rate prescribed by the Monetary Policy Committeee from time to time.
The circulat titled “Re: Guidelines on accessing the CBN standing deposit facility”, addressed to all banks, said the remunerable daily placements by banks at the SDF shall not exceed N2 billion.
In the November 6, 2014 guidelines on accessing the CBN standing deposit facility, the CBN had noted the preference of banks and discount houses to keep their idle balances at its SDF, thereby “constraining the process of financial intermediation”.
As a result, the apex bank had then set the remunerable daily placements by banks and discount houses at the SDF at a maximum of N7.5 billion, to be remunerated at the SDF rate of N10 percent per annum.
However, the apex bank, at the time, said placements above N7.5 billion shall not be remunerated.
“These provisions are without prejudice to the subsisting MPR corridor. For the avoidance of doubt, the SDF remains operative a monetary policy tool, but patronage of the facility shall be subject to the above modifications”, the circular said.