CBN Slashes Banks’ Daily SDF Deposit to N2bn

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Obinna Chima
The Central Bank of Nigeria (CBN) will no longer remunerate daily bank deposit in excess of N2 billion placed at its Standing Deposit Facility (SDF) beginning from today.

The SDF is a window where banks can place excess funds overnight with the CBN. The interest to be earned on such funds is determined with reference to the lower band of the asymmetric corridor around the Monetary Policy Rate as prescribed by the Monetary Policy Committee (MPC).

According to a circular released on Wednesday and signed by the Director, Financial Markets Department, CBN, SDF deposit of N2 billion shall, however, be remunerated at the interest rate prescribed by the Monetary Policy Committee from time to time.

The circular made reference to a circular to all banks and discount houses, Re: Guidelines on Accessing the CBN Standing Deposit Facility, Ref: FMD/DIR/GEN/CIR/05/020 and dated November 6, 2014.

It stated: “The remunerable daily placement by banks at the SDF shall not exceed N2 billion.
“The SDF deposit of N2 billion shall be remunerated and 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. The provisions of the circular take effect from Thursday, July 11, 2019.”

This came barely a week after the CBN, in its bid to improve lending to the real sector of the Nigerian economy; mandated all Deposit Money Banks (DMB) to maintain a Loan to Deposit Ratio (LDR) of 60 per cent by September 30, 2019.