CBN limits daily placements by banks to N2 billion

CBN limits daily placements by banks to N2 billion

The Central Bank of Nigeria has reduced daily placement by Nigerian deposits money banks to N2 billion.

In its July 10 circular, with reference  to all banks and discount houses, the apex bank said that the remunerable placements should not exceed N2 billion.

The CBN circular implies that any deposit above the set floor would not be remunerated from July 11, 2019.

It stated that Special Deposits Facility deposits of N2 billion shall be remunerated at the interest rate prescribed by the monetary policy committee from time to time.

Meanwhile, available data shows that banks continued to access the CBN’s window.

The window is made up of Standing Lending Facility (SLF) for borrowing and Standing Deposit Facility (SDF) for depositing of excess liquidity.

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It was designed to aid banks in managing their short term cash positions at the end of each business day.

It would be recalled that in the first quarter of the financial year 2019, banks made total sum of N8.4 trillion as total request for the SLF inclusive of intra-day lending facilities (ILF) which were converted to overnight repo as against N3.68 trillion in the preceding quarter.

First quarter data showed that daily average borrowings amounted to N137.81 billion in 61 transaction days. Thus total interest charges closed the period at N5.65 billion.

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This compared with the daily average of N62.33 billion in 59 transaction days, with total interest charges at N2.54 billion at the end of Q4 of 2018.CBN limits daily placements by banks to N2 billion

Banks deposited N2.92 trillion at the SDF during the first quarter of 2019, with daily average of N47.8 billion, compared with N4.41 trillion, with daily average of N75.99 billion, in the preceding quarter in 2018.

Similarly, the banks’ earnings from SDF in the first quarter was N990 million, compared with N1.59 billion in the fourth quarter in 2018.

The new directive would effectively reduce the amount each bank can make from placements in the window in the second half of the year.

CBN limits daily placements by banks to N2 billion

VIAOgochi Ndubuisi
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