The Central Bank of Nigeria (CBN) has lent banks and discount houses N5.74 trillion to boost liquidity. The figure is an increase of 124.4 per cent compared to the N2.56 trillion in the preceding quarter.
The fund, which came as Standing Lending Facility (SLF), was granted in the third quarter, which ended in September, at 14 per cent. The SLF is an overnight credit available on banking days between 2 pm and 3.30 pm, with settlement on the same day value.
Also, the total Standing Deposit Facility (SDF) was N14.3 trillion during the third quarter, representing an increase of 135.1 per cent over the level in the preceding quarter.
According to the CBN, banks’ deposits at the apex bank increased by 14.8 per cent to N7 trillion in contrast to the decline of 10.2 per cent at the end of the preceding quarter. The development reflected largely, the 75.4 per cent rise in banks deposit, which more than offset the 32.5 and eight per cent decline in the deposits of others’ and Federal Government, respectively.
The CBN attributed the significant increase in activities in the standing facilities window mainly to the banks’ preference for depositing their overnight balances at the discount window rather than placing them at the interbank.
It explained that money market rates were influenced by the liquidity condition in the banking system arising from the introduction of the 50 per cent Cash Reserve Ratio (CRR) on all public sector deposits, coupled with the delay in the release of fiscal allocation.
The CBN had on November 19 Monetary Policy Committee (MPC) meeting maintained the Monetary Policy Rate (MPR) at 12 per cent, and kept the symmetric corridor of plus two per cent around the MPR for SLF. However, the SLFs are available only to banks and discount houses that have executed the Nigerian Master Repurchase Agreement (NMRA) with the regulator. The NMRA covers the operations of the SLF and addresses issues relating to pricing, duration, custodian as well as default resolution in lending.
The Liquidity Ratio Cash Reserve Ratio (CRR) and the Net Open Position were also retained at their preceding quarter’s levels of 30, 12 and one per cent.
It said discount window also remained open to authorised dealers to access both the standing deposit facility (SDF) and standing lending facility (SLF). Overall, developments in money market indicators were mixed in the review quarter.
The CBN said that the value of money market assets outstanding at the end of the third quarter stood at N6.5 trillion, showing an increase of 0.34 per cent, compared with the increase of 5.96 per cent at the end of the preceding quarter.
The development was attributed, to the 94.13 and 53.15 per cent increase in banks investments in Commercial Paper and Bankers Acceptances outstanding during the period under review.
There were also mixed developments in banks’ deposit and lending rates during the third quarter. The average savings deposit rate, which rose to 2.44 per cent from 2.04 per cent in the second quarter, all other rates on deposits of various maturities fell from a range of 5.69 per cent to 7.72 per cent to a range of 4.92 to 7.55 per cent in the third quarter.
The weighted average inter-bank call rate, which stood at 11.69 per cent at the end of the second quarter of 2013, rose by 2.34 percentage points to 14.03 per cent in the third quarter of 2013, reflecting the liquidity condition in the banking system.
Similarly, the weighted average rate at the Open Buy Back (OBB) segment rose to 14.14 per cent at the end of the review quarter from 11.27 per cent in the preceding quarter. The Nigeria Inter-bank Offered Rate (NIBOR) for the seven-day and 30-day tenors rose to 13.79 and 13.95 per cent from 12.19 and 12.46 per cent, in the preceding quarter.
