No More Interest Payment on Bank Deposits Exceeding N2 billion, Says CBN
As part of its effort to stimulate lending to the real sector of the economy, the Central Bank of Nigeria has directed that banks’ daily deposits placement through the CBN’s Standing Deposit Facility, shall no longer exceed N2 billion.
According to a circular released on the apex bank’s website and titled “Guidelines on accessing the CBN Standing Deposit Facility”, daily deposits by any bank in excess of N2 billion shall not attract interest payments.
According to the circular which was signed by the apex bank’s Director of Financial Markets Department, Angela Sere-Ejembi, the new directive will take effect from today, Thursday, July 11th, 2019.
Some of the key highlights from the circular include: that the remunerable daily placements by banks at the SDF shall not exceed N2 billion, that the SDF deposit of N2 billion shall be remunerated at the interest rate prescribed by the Monetary Policy Committee (MPC) from time to time and that any deposit by a bank in excess of N2 billion shall not be remunerated.
It should be noted that the new guideline (N2 billion) by the apex bank represents a 73% reduction from the previous limit of 7.5 billion introduced way back in 2014.
It was gathered that in November 2014, the Central Bank of Nigeria observed that deposit money banks and discount houses preferred to keeping their idle balances in the Standard Deposit Facility with the CBN. Unfortunately, this preference contributed to the restraining of the financial inter-mediation process. And this was why the CBN opted to review the guidelines for the operation of the standing deposit facility.
The review recommended that daily placements by discount houses and banks at the SDF should not exceed N7.5 billion. This was to be remunerated at the SDF rate at 10% annually.